English football referees record a ground-breaking win against the taxman

HM Revenue & Customs (HMRC) has lost a major tribunal against Professional Game Match Officials Limited (PGMOL) – the professional body representing over 30,000 amateur football referees in the English game.

The legislation in question was IR35 – rules put in place by HMRC to stop ‘false’ self-employed workers taking advantages of tax and National Insurance Contributions (NICs) savings.

HMRC had charged PGMOL £584,000 in back-dated taxes (2014-2016) because it believed that the referees in question were not self-employed and were, in fact, operating similarly to permanent employees. The tribunal ruled that this was not the case and consequently, over 30,000 referees were fully entitled to pay less NICs (9 percent instead of the higher rate of 12 percent) compared to workers in full-time occupations. The tribunal also announced that PHMOL did not need to make 13.8 percent Employers’ National Insurance Contributions.

PGMOL mainly argued that referees were not officiating on a full-time basis and a large majority have second jobs to tie them over. This is not the case in the Premier League, where referees are given a strict schedule and do not have the luxury of turning down assignments given to them by the Football Association.

If HMRC had come out victorious, over 30,000 amateur referees would have been affected and their pay would inevitably be diminished. PGMOL would also have seen the cost of employing the referees increase by approximately 14 percent because of the need to pay ongoing Employers’ National Insurance Contributions.

By winning the tribunal, PGMOL has set a precedent not only for their contracted workers but tens of thousands of officials working in varying English sports. This scenario is another very public example of HMRC failing to enforce and fully understand its own legislation.

Andy Chamberlain, Deputy Director of Policy at the Association of Independent Professionals and the Self Employed (IPSE) said: “HMRC lost this case because, yet again, it misconstrued the concept of Mutuality of Obligation (MoO) which it seems to assume is present in every engagement. The tribunal disagreed. That, combined with a lack of control by PGMOL over the referees, were clear indicators that this was not an employee-employer engagement. Unfortunately, we have again had to rely on the courts to make this determination. This comes on the back of HMRC having lost three out of four cases in the tax tribunal which have also turned on a misunderstanding of key employment indicators.”

In response to the defeat, HMRC said that they were “disappointed” with the outcome and as a result would study “the detail of the ruling carefully before deciding on the way forward.”

Are you affected by IR35?

If you are a contractor operating through a limited company, you will either be inside or outside IR35 (depending on your specific working circumstances). In order to pay yourself in compliance with HMRC legislation, we strongly suggest you have every contract reviewed by an IR35 specialist. When you choose Churchill Knight & Associates Ltd as your contractor accountant, you can benefit from discounted IR35 reviews through our professional partners.

For more information or to discuss the advantages of contracting through your own limited company, please give our friendly professionals a call on 01707 871622 or contact us here.