COMPLIANCE
Justine Riccomini MSc FFTA AIPA Chartered MCIPD ChFCIPP, head of tax (employment and devolved taxes), the Institute of Chartered Accountants of Scotland (ICAS), sheds light on the ongoing battle between HM Revenue and Customs (HMRC) and Professional Game Match Officials Ltd (PGMOL) Employment status: the ball is still in play
T he Supreme Court (SC) issued its decision on HMRC v PGMOL (Appellant) [2024] UKSC 29 on 16 September 2024 – 15 months after the case was heard. It could be that the SC was snowed under with decision- making duties, but I prefer to believe that the delay – normally it takes up to nine months to issue a decision – was down to the judiciary taking care to give the best decision it could in the circumstances. There have been so many employment status case decisions over the past 20-plus years and employment tax advisers were keen for the SC to set a precedent which ultimately sets down how employers and advisers should structure their approach to employment status decision-making – in the hope that less time is spent deciding it in the courtroom. The case in hand Around 60 match officials who are technically classified as amateurs, due to refereeing being a secondary ‘hobby’ role for the vast majority of them, contracted with PGMO Ltd to supply their personal services and agree to abide by set standards of officiating the English Football League’s Tier 1 and 2 matches, as well as the Champions League and FA Cup. The officials would agree to work on a particular match in return for a fee, expenses and performance-related bonuses and could, if necessary, pull out if injured and in certain other circumstances. After conducting a review, HMRC assessed two tax years (2014/15 and 2015/16) and computed pay as you earn (PAYE) and National Insurance contribution liabilities in relation to the officials who it concluded were employees working under an overarching contract of employment. A computation was presented to PGMOL,
The SC’s decision The SC did not make a final decision on this case, which many tax professionals were expecting it to do. The SC ruled that the so-called “irreducible minimum” requirements of mutuality of obligation and control deemed necessary to establish a contract of employment between the officials and PGMOL existed – crucially, in relation to each contract, on a match-by-match basis. The SC quashed the CA’s decision in relation to mutuality of obligations, opining that mutuality can in fact apply to each discrete contract – thus concluding it was unnecessary to examine any overarching contracts between the parties. Having established that parts one and two of the Ready Mixed Concrete tests were fulfilled, the SC sent the third test back to the FTT to decide whether the individual contracts were in fact contracts of employment. Crucially, the SC included an opinion that when examining employment status, consideration needs to be given to all of the fact pattern and not just part of it. Mutuality alone is not a sufficient test to prove employment, nor is control. What happens now Once again, we find ourselves waiting for the FTT to conclude its deliberations in relation to this case. In the meantime, now is the time for a long overdue review of employment status. Hopefully, the new government will use the opportunity to undertake a root and branch review of employment status because the unacceptable levels of complexity are currently proving to be a barrier to business, the wider economy and labour market forces. n
which appealed, arguing that each of the agreements were discrete, standalone contracts between an engager and a self- employed individual. The following sequence of court appearances ensued: ● First Tier Tribunal (FTT): the FTT found that insufficient mutuality of obligations and control existed and found in favour of PGMOL. HMRC appealed ● Upper Tribunal (UT): the UT held FTT had erred on the control point but concluded insufficient mutuality existed and dismissed HMRC’s appeal. HMRC appealed ● Court of Appeal (CA): the CA agreed appeal could be heard on the basis of the mutuality point. The case was remitted back to FTT to reconsider both aspects of its decision (control and MOO). PGMOL appealed to the SC on both issues
applying to discrete contracts ● SC: the SC decided to make
recommendations to the FTT and remitted it back there for a decision to be remade. The SC found in favour of HMRC on the first two aspects of the Ready Mixed Concrete case tests but remitted the case back to FTT for it to decide on the third. What the SC was asked to do The SC was asked to review the decisions made by the courts in earlier hearings. The SC made its decision covering the first two tests of the Ready Mixed Concrete decision and then remitted it back to the FTT to remake its decision in relation to the third test of that case, having set out a series of recommendations that it wishes the FTT to consider. The final decision – to determine whether a contract of employment exists based on the third aspect of the Ready Mixed Concrete tests – is therefore now in the hands of the FTT.
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| Professional in Payroll, Pensions and Reward |
Issue 106 | December 2024 - January 2025
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