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Referees show HMRC a red card

Article posted: 26th September 2018

A recent tax case has once again ‘blown the whistle’ on the difficulty HMRC has in being able to determine whether an individual is employed or self-employed.

It involved a company called Professional Game Match Officials Ltd (PGMOL) and a group of 60 professional football referees. PGMOL employed the referees under full-time written employment contracts for some events, but the case concerned payments the individuals received for refereeing in their spare time in addition to full-time employment.

HMRC’s argument was that these payments should have been subjected to PAYE tax and NIC deductions as they too arose from an employment relationship. However, the referees cried foul arguing that due to the lack of two core features of employment, they should be regarded as self-employed contractors for these additional activities.

The two factors they invoked were mutuality of obligation (MOO) and control. MOO is legally defined as ‘some level of obligation to perform work personally and pay remuneration’. Control is a ‘sufficient framework of control’ in respect of an ‘ultimate authority’.

In siding with the referees, the judge in the case concluded that ‘individual appointments to matches were engagements to perform the task of officiating at the match in question for a fee and not contracts of service’

What this case demonstrates is that like the offside rule, the rules in this area are not always clear cut, and if HMRC struggles to determine who is employed and who is self-employed, then most other people will be too.

Football authorities have recently introduced Video Assistant Referees (VAR) to help ensure the offside rule is interpreted correctly. Maybe, now is the time for government authorities to consider introducing a clear definition of self-employment, so this can be interpreted correctly as well, without having to rely on the courts.

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