IR35 experts clash over PGMOL rehearing verdict

Disagreement about it from a range of IR35 and status experts who usually agree with each other is one of the few certainties emerging from the ‘PGMOL rehearing verdict.’

Tax lawyer Rebecca Seeley Harris says the Court of Appeal’s move to pass back the case to the FTT to remake its decision on the referees’ status is “no doubt… a win for HMRC.”

Contract reviewer Seb Maley regards the court’s ruling similarly, saying the “long and short of it” is that appeal judges “agreed with HMRC’s argument around Mutuality of Obligation.”

But Chartergates says the appeal court’s judgment is so damning for the Revenue that it leaves the tax authority’s long-held interpretation of MoO in disarray.

'Difficult to see HMRC sticking to its stance'

The law firm said: “It is difficult to see how HMRC can  -- if acting reasonably -- continue to stand by their stance on MoO.”

Pointing to a specific part of the September judgment, the firm pointed out that the appeal court remitted the case to the FTT to determine:

“‘Whether there were sufficient MoO and control in the individual contracts to be contracts of employment.’”

In an email update, Chartergates reflected: “[So] here the CoA are categorically rejecting HMRC’s view that MoO only goes to whether a contract exists, by asking the FTT to decide whether there is enough MoO in the already existing contract to warrant that contract as one of employment.”

'Set the precadent'

Sent on Friday, the law firm’s  update then appears to caution about the applicability of PGMOL, saying the CoA decision is “very specific”.

More significantly for contractors affected by IR35 wondering about implications for themselves, aspects of the referees’ working arrangements are “highly unusual,” and because they were refereeing as hobby, the case will be “difficult…to translate” to others, the update says.

But Brookson Legal disagrees, saying lawyers are waiting on the outcome because it will “set the precedent for cases in both the public and private sectors.”

'Blow CEST out of the water'

Also suggesting a far from a narrow application, IR35 expert Kate Cottrell told ContractorUK: “Many onlookers were hoping that the decision in PGMOL would blow CEST out of the water. But we will have to wait for a further FTT to see if that happens.”

Yet not sounding convinced that ‘many’ will be affected is Stepehen Mhiribidi, head of legal at the Independent Health Professionals Association.

“I think the only cases -- well most [cases] rather than [the] only cases -- that will be impacted [by PGMOL’s ultimate conclusion] will be those where a determination was arrived on based on a heavily weighted MoO decision, versus other factors.”

'Full factual matrix'

In a LinkedIn post, Mr Mhiribidi continued: “As I and many others have repeatedly stated - status is determined on the full factual matrix, and each case is different.”

This assertion that standing back to look at the whole picture is key to determining status accurately (as was seen in both the IR35 cases of Kaye Adams and ATDSL), may be the one area which the disagreeing experts actually agree on.

“One thing which remains true,” said Brookson Legal’s Matt Fryer, seeming to acknowledge the widespread division over the PGMOL rehearing verdict, “is [that it’s] essential to view the picture as a whole to conclude employment status. No one single fact will be determinative.”

'The court has not helped'

ReLegal Consulting, run by Ms Seeley Harris agrees. “The court has not….helped clarify the issue [of Mutuality but] what we do know is that.. employment status cannot be decided by Mutuality alone,” she said. “All the circumstances must be taken into account.”

But the contentiousness of PGMOL is never far away.

Of the case’s future (and after it is reheard by the FTT), Chartergates says: “Given the importance of this judgment, an appeal to the Supreme Court, by either party, cannot be ruled out.”

'Further blow'

Yet Brookson’s Mr Fryer foresees a shorter run, with a less formal outcome: “Whether the parties will have a desire -- or funds -- to continue to fight this dispute, is yet to be seen.

“The legal costs of going through three courts is likely to be mounting and may prompt the parties to discuss an amicable settlement,” he said. “[This would] be a further blow to avid followers of this case who are keen to see it conclude and provide further clarity in such a complex area of law.”

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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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