PGMOL Court of Appeal case: football referees' IR35 status ‘requires a replay’

A £584,000 tax case concerning the IR35 status of professional football referees will go to a “replay,” because Court of Appeal officials believe the previous two courts made mistakes.

In a ruling on Friday, the CoA’s Lady Justice Elisabeth Laing ordered ‘PGMOL’ to be reheard at a First-Tier Tribunal, saying the initial FTT and the subsequent Upper Tribunal “erred in law”.

It means the outside IR35 win for Professional Game Match Officials Ltd, issued by the FTT and then upheld by the UT, will be reviewed, owing to errors around Control and Mutuality.


“In football terms, we are going to a ‘replay’,” WTT Consulting's head of tax investigations Tom Wallace said, referring to the referees working at sub-Premier League fixtures. 

He added: “The CoA has unanimously decided that the First Tier Tribunal and Upper Tier Tribunal erred in law in their approach to Mutuality of Obligation, and the FTT erred in law on its approach to the question of control in the individual contracts.”

Seb Maley, of IR35 contract reviewer Qdos confirmed on Friday that HMRC has not won the PGMOL case outright, yet he believes the decision to have it reheard is a boost for the Revenue.

'Decision will give taxman confidence'

“The case was first heard in 2018, with HMRC of the belief that referees working between 2014 and 2016 should have been classed as employees of the refereeing association.

“[So] the Court of Appeal’s decision will give the taxman confidence,” he said, “[but] HMRC hasn’t won this case…[and the decision] doesn’t give clarity to either party”.

Mr Maley added that the rehearing means “an even longer wait,” both for the directly affected but also for Dr George Mantides, as judges in his case say they won’t decide the urologist’s IR35 status until PGMOL concludes.

'Had hoped for a clearing up of HMRC's misunderstanding'

Among the disappointed parties must be Chartergates, because just before the decision, the law firm spoke of ‘looking forward to HMRC’s misunderstanding on MoO being cleared up.’

But the CoA says that both the FTT and UT “each” wrongly decided that “the ability of either side to pull out before a game negated the necessary” level of Mutuality.

Explaining its support of HMRC’s position -- that MoO was key to why the referees should have been categorised as employees of the referees’ association, not self-employed, the CoA said:


“The correct analysis is that if there is a contract, the fact that its terms permit either side to terminate the contract before it is performed, without breaching it, is immaterial.

“The contract subsists (with its mutual obligations) unless and until it is terminated by one side or the other.”

Lady Justice Laing found the UT made other Mutuality blunders too, but the CoA judge meant “no disrespect” and blamed the tribunal’s “overcomplicated” take on the parties’ “elaborate submissions”.

'Many features of Control'

Endorsed by Lord Justice Henderson and Sir Nicholas Patten, the CoA judgment further finds fault with the UT on Control, saying “many features” of the referees’ working practices indicate a “sufficient framework” was in place between them and the association to indicate that a master-servant relationship was in play.

As if almost to give clues on where the FTT should re-examine, the judge listed more than a dozen features of the relationship as “examples” of PGMOL being subject to control.

But Mr Maley sounds like he regrets that any re-examination is going ahead at all.

“Batting it back to the First Tier Tribunal leaves everyone in limbo,” he said of the CoA’s decision, but referring to the many parties depending on the courts for a final determination.

'An IR35 match that hasn't delivered -- but the replay may'

Qdos’ CEO added: “A case of this magnitude -- and one involving such staggering sums -- serves as an important reminder of the need to engage people under the correct employment status. Make mistakes and businesses can easily find themselves caught up in long-running, high-profile cases with devastating financial consequences.”

Also with an eye on whatever the final score will be between the football referees and HMRC is WTT’s Mr Wallace.“[PGMOL] is a match that has failed to deliver for the fans -- so far. But the replay may have some spice to it. It is a reminder, though, of the significant prize at stake in the game these days -- £584,000 to the [ultimate] winner,” he said.

'Highlights the impossible task clients face'

For now though, there can be frustration but not too much surprise by those potentially affected by the case which even includes companies caught by private sector IR35 reform, according to tax lawyer Rebecca Seeley Harris.

"It is not unusual for the appellate court to refer the decision back to the FTT, which is the specialist fact finding tribunal, but it is incredibly frustrating," said Ms Seeley Harris, the founder of ReLegal Consulting.

"Saying that the FTT and the UT each erred in law in the approaches to the question of mutuality just shows how incredibly difficult this test is -- and further shows how impossible it is to expect clients to be able to apply this to every day status decisions."

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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