Tuesday 21 September 2021 8:00 am

Legal Q&A: How referees' pay could be hit by a tax dispute with HMRC and why this could have wide-reaching effects on the gig economy

Lawyer Kevin Barrow explores the implications of an ongoing case between referees and HMRC.

What’s this case about?

It’s about whether PGMOL (Professional Game Match Officials Limited) needs to deduct income tax and National Insurance Contributions (NICs) from payments it makes to referees whom it has engaged on a self-employed “gig worker” basis to officiate at professional football matches.

The case relates to referees below the “select group” who officiate most major games (who are in fact engaged as full employees by PGMOL) and turns on their tax (and employment) status. Is the way they work too occasional to count as employment, and are they controlled enough to be legally defined as employees?

What is the latest?

The Court of Appeal has made clear that occasional workers like these referees can be employees for tax purposes.

The court also said, in connection with the control aspect of the employment test, that it does not necessarily matter that no “employer” stands next to the referee and tells them how to do their work during a game;  the control test may be satisfied if there is a framework of control with coaching and strict codes of practice being provided to the referees and an assessment system.

What does it mean for referees and HMRC?

The case has been sent to a lower tribunal to consider whether, in the case of these particular referees, there was a sufficient framework of control for them to be deemed employees. If so, tax and NICs will have to be deducted from their pay.

Unless PGMOL decides to gross up their pay, this may leave the referees with significantly lower take-home pay (given in particular the impact of Employers’ NICs). That may lead some to try to bring employment law claims against PGMOL.

What else may it mean?

This decision will have implications for other types of “occasional” workers including those on gig platforms.

Many are paid without deduction of tax and NICs on the grounds that they are engaged on an occasional basis without anyone watching over their work. Increasingly, whether “control” exists through a “framework” of control may become the main factor in determining employment rights and tax status.

A relatively small case about referees may have huge implications for the gig economy, potentially reducing the take-home pay of many gig workers or putting up the costs of many gig platforms.

Kevin Barrow is a workforce solutions lawyer at Osborne Clarke.

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