Status of professional referees upheld by UTT

First tribunal tax decision upheld

On 8th May, the Upper Tribunal Tax (“UTT”) upheld the First Tribunal Tax’s decision that professional referees in England were not employees of Professional Game Match Officials Limited (PGMOL) but rather were engaged under a contract for services.  Whilst this was an employment status case and not specifically an IR35 matter, it focused on one of the “IR35 pillars”, mutuality of obligation (“MOO”), which is required for an employment relationship to exist. 

Mutuality of obligation pivotal

HMRC originally lost its case in 2018 on the basis that there was insufficient MOO between PGMOL and the football referees engaged. In appealing the decision, HMRC argued that MOO is relevant only to the question of whether there is a contract at all and whether the contract contains an obligation to provide services personally. This argument was rejected by the UTT who relied on numerous Court of Appeal precedents and concluded (again) that for MOO to exist there must be:

  • An obligation to perform at least some work and an obligation to do so “personally”
  • An obligation on behalf of the employer to provide work, or in the alternative, a retainer or some form of consideration in the absence of work
  • Obligations that subsist throughout the whole period of the contract

HMRC’s contention rejected

The UTT stated: ‘we think it is insufficient to constitute an employment contract if the only obligation on the employer is to pay for work if and when it is actually done”. They also concluded “ we reject HMRC’s contention that the requirement that there be mutuality of obligation is irrelevant to the categorisation of the contract as one of employment or one for services, beyond merely requiring that the services be performed personally.’

This ruling has taken a sledgehammer to HMRC’s stubborn stance on MOO and should be the final blow to that argument. In our view, The UTT ruling now provides HMRC with no alternative but to admit defeat and to make the amendments to CEST so that it is reliable and consistent with established case law.