HMRC handed red card in £584,000 football referee tax lawsuit
HMRC has lost a long-running legal battle against the UK’s football refereeing body over the employment status of 60 referees, after the tax authority issued a £584,000 tax bill.
In a judgment on Friday, the First Tier Tribunal (FTT) upheld that the referees were self-employed and not employed by the body, the Professional Game Match Officials Limited (PGMOL), as HMRC had originally claimed.
The tax office alleged that PGMOL owed tax for the referees, whom it claimed were employees and should have paid tax and National Insurance contributions for the tax years 2014-15 and 2015-16.
PGMOL provides referees and trains them to officiate at the highest level of professional football competitions, including the FA Cup and the Premier League.
After being hit with the tax bill in 2018, PGMOL appealed to the FTT, which backed the body.
The arguments then continued through the Upper Tribunal and the Court of Appeal before reaching the highest court, the Supreme Court.
The top UK court was asked whether the relationship between the company responsible for providing referees to the Football League and part-time referees can be classed as an employment relationship, sparking an obligation to deduct income tax and national insurance from payments made to the referees.
However, the Supreme Court dismissed the appeal and sent the case back to the FTT.
On Friday, the FTT held that the contracts were not contracts of employment because there was no ongoing legal obligation on PGMOL to offer work or on referees to accept it, and referees retained the right to withdraw from matches even after accepting the work.
The judges said this was “fundamentally inconsistent with the structure of employment” and added that overall it was “not a finely balanced case.”
“What emerges instead is the picture of skilled professionals participating voluntarily in a regulated framework,” the court said.
Dave Chaplin, chief executive of IR35 tax compliance firm IR35 Shield, said this is “a decisive defeat for HMRC” and that the tribunal “has dismantled many of HMRC’s long-held assumptions about how status case law should be applied.”
“Most tellingly, the tribunal did not see this as a finely balanced case and said the relationships with referees lacked the defining hallmarks of employment,” Chaplin said.
Employment status ‘remains an area of great uncertainty’
“The tribunal has taken the view that, if it quacks like a duck, it is a duck,” Tim Stovold, head of tax at Moore Kingston Smith, said.
Stovold added that even after the eight-year-long legal battle through the court system from the first tier to the highest court, there is “still the risk that HMRC could appeal”, and employment status “remains an area of great uncertainty” in the tax system.
HMRC has the right to appeal if it wishes, and a spokesperson said it is “carefully considering our next steps.”