The long-awaited Court of Appeal decision in the football referees case has been handed down and it is significant, with implications far wider than the world of football, according to Pinsent Masons Tax specialist Chris Thomas.
Thomas outlines in a video interview with HR News/EmploymentLaw+ that the court says that a single assignment under an overarching contract can be a contract of employment caught by the IR35 tax regime, even if there is no obligation to accept the particular assignment. So, occasional workers, like the referees in PGMOL case, can be deemed employees for tax purposes.
Thomas explains in his article for Outlaw that the case centred on a company that was set up to engage professional football referees, called PGMOL. The issue is whether they need to deduct income tax and NICs from payments they make to a select group of ‘second tier’ referees they engage on a self-employed ‘gig worker’ basis to officiate matches. So, is the way they work too occasional to count as employment and are they controlled enough to be deemed employees? The Court of Appeal has made it very clear that occasional workers, like these referees, can be employees for tax purposes.
“Let’s imagine that there’s a relationship between an engager and the individual contractor,” says Thomas. “The fact that there is no right to have work provided or obligation to provide it, in the gaps, if you like, HMRC has always said, well, that’s not relevant, because all that’s relevant is that there is a mutuality in relation to any one of those particular times when you do actually come and do work.
“So they would say that, effectively, mutuality is really present in every case, because in any case where we actually agree to do something and then clearly you’re bound to do it. The fact I then have to ask you to do it again, or the fact you don’t have to come back next time, HMRC would say is not relevant.
“Now, historically, I think a lot of advisors have not necessarily agreed with that approach and, indeed, some of the decisions in the courts have not been consistent with that, and I think it had been thought in some circles that HMRC’s approach was not necessarily correct and that really it was appropriate to give a bit more weight to the question of whether there was an ongoing right to be to be given work and an obligation to do it on an ongoing basis. So that’s particularly relevant to cases where it isn’t one long engagement, it’s kind of more sort of ad hoc, as indeed it was in this case.
“So that’s the critical thing because, essentially, what this Court of Appeal judgement has said is broadly they’ve agreed with HMRC’s analysis which will have implications for the concept of when there is and is not mutuality and, therefore, when there is and is not deemed employment.”
Listen in on the interview to hear what Thomas has to say about how future cases may pan out: