Replay needed after court calls foul in IR35 football case

An IR35 status case involving 60 professional football referees needs a replay after the Court of Appeal called 'foul' on an earlier decision.

In 2018, HMRC had argued that referees working between 2014 and 2016 should have been classed as employees of the refereeing association, not self-employed workers. Professional Game Match Officials Ltd (PGMOL) was therefore issued with a £584,000 tax bill, for missing employment taxes for the period.

HMRC lost that legal battle in the First-Tier Tribunal (FTT) after PGMOL successfully argued against HMRC that most referees should be considered self-employed, and are therefore entitled to pay a lower rate of NICs.

In 2020, HMRC challenged the decision in the Upper Tribunal but the courts again sided with PGMOL in handing down a decision that their referees are indeed self-employed.

HMRC unsuccessfully tried to use mutuality of obligation as a basis for its argument, but this was dismissed by the judge, who ruled: "A contract that provides merely that a worker will be paid for such work he or she performs contains the necessary mutuality of obligation to render it a contract of service. The worker is not under an obligation to do any work, and the counter party is not under an obligation to make any work available."

Replay

However, the final whistle had not been blown and HMRC appealed that decision to the Court of Appeal which ruled that the two previous tribunals had 'erred in law' and that the case should be reheard at the First Tier Tribunal.

It ruled that certain decisions, particularly relating to the 'mutuality' aspect, made at the original FTT, some of which were upheld by the subsequent Upper Tier Tribunal, were deemed by the Court of Appeal to be incorrectly applied, meaning they must be reconsidered.

Seb Maley from IR35 tax specialists, Qdos, said: "While the Court of Appeal's decision will give the taxman confidence, HMRC hasn't won this case. Frankly, this news doesn't give clarity to either party and they face an even longer wait for it to conclude.

"Given the potential implications of this case, which could decide the outcome of others and even force HMRC to revisit its own understanding of employment law, batting it back to the First Tier Tribunal leaves everyone in limbo.

"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."