HMRC lost another interesting case this week involving football referees and their employment status.
An assessment of over £500k in unpaid tax and national insurance had been raised against a company called the Professional Game Match Officials Ltd (PGMOL), on the basis that HMRC considered some of their football referees to be employed, rather than self-employed.
PGMOL provides referees and match officials to competitions such as the Premier League, FA Cup and the English Football League (Championship, League 1 and League 2). The company has three members, the FA, the FA Premier League and the English Football League.
Many of the referees are employed by PGMOL under full-time contracts and are paid via PAYE, these are referred to as ‘Select Group’ referees. They have defined roles within the business and are deemed to be under the supervision, direction and control of their employer.
The case with HMRC relates to a ‘National Group’ of self-employed individuals who referee in their spare time, often alongside other full-time employments. These refs officiate matches in the EFL and FA Cup. They are paid a modest fee by PGMOL and expenses by the home club and not via the FA. HMRC argues they should be deemed as employees.
The Employment Status Test
From other blogs we’ve written, you might be familiar with the things HMRC look for when deciding if an individual is genuinely self-employed:
- Is there the right of substitution?
- Do they provide their own tools and equipment?
- Can they decide what work to undertake, how and when to do it?
- Do they have multiple clients?
- If a mistake is made do they need to rectify it in their own time, at their own expense?
Often a contract between the client and the self-employed worker stipulates many of the above clauses, but HMRC then look to see if the working practices correctly reflect the terms.
So, Were The Refs Offside?
There is no right of substitution.
The National Group referees are provided kit to wear on the pitch and suits to wear to and from games showing the PGMOL logo. However, they are expected to provide their own football boots, watches, cards and whistles. They also have their own computers and pay for gym membership and Sky Sports TV Subscriptions personally. Although PGMOL does offer a heart screening programme and psychological support.
The referees have no obligation to accept match appointments and although they can’t pick which matches to work at, they can give a geographical preference. They are expected to have a satisfactory level of fitness and to obey the football match rules and regulations, laid out by the FA.
The referees only have one paymaster. They are not required to raise invoices, but when they submit their post-match report, payment is automatically released.
All referees, whether employed directly or self-employed, have a clause in their contract relating to immediate dismissal if caught accepting bribes. They must also log all gifts or hospitality received for more than £50, with anything over £100 needing prior approval.
If a referee does not show up for a match they are not paid. They can also be cancelled at short notice.
HMRC argued that the self-employed referees had an obligation to attend matches.
HMRC argued that PMGOL had sufficient control over them.
HMRC argued that the referees only worked for one primary paymaster and were not able to select their hours.
HMRC were adamant that the referees were not in business on their own account.
Time for VAR
The first tier tribunal disagreed with HMRC. Whilst there were pointers towards employment status there were sufficient exceptions in relation to mutuality of obligation and control for the ruling to confirm that the refs were self-employed and therefore the tax and NIC were not due.
Refs Win on Penalties
It was an interesting case and shows how the rules on employment status are not always clear.
Our advice to businesses and self-employed workers is to check your contracts and ensure that your working practices truly reflect a distinction between the client and the worker.
Key things to keep in mind are Supervision, Direction and Control, if the power in these areas is with the Client then an employment status challenge by HMRC could result in a home defeat!