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Sports Tax: Status of Football Referees and Match Officials

By Kevin Offer, Partner and Head of Tax, Hardwick & Morris LLP, London, United Kingdom On 6 May 2020, the Upper Tribunal (Tax and Chancery Chamber) (UTT) published a decision in the case of CRC v Professional Game Match Officials Ltd on the employment status of football referees and match officials. This decision will also be of wider interest to referees and match officials of other sports. The case concerned referees and other match officials who mainly officiate in the lower divisions of the English Football League and in FA Cup games. These individuals are normally officiating in their spare time whilst working full time. The appointments are arranged through Professional Game Match Officials Limited (PGMOL), which provides referees and other officials for the Premier League, English Football League and FA competitions. Those referees officiating in the Premier League are fully employed by PGMOL and their position was not the subject of this case. As regards part-time referees, PGMOL operates under a code of practice which sets out provisions, such as the FA or league having to set the fees to be paid to the referees, interaction with media, provision of kit, and so on. There is also a general provision stating that there is “…no guarantee that Match Officials on the List will be offered any appointments to matches and Match Officials are not obliged to accept any appointments to matches offered to them.” This clause was included to avoid “mutuality of obligation” or control. The view of the UK tax authorities (HMRC) was that the referees were also employees of PGMOL. HMRC raised determinations under Regulation 80 for PAYE (income tax) and under the Social Security (Transfer of 25 Functions) Act 1999, s 8 for class 1 National Insurance. PGMOL appealed against these determinations on the basis that there was no employment contract with the referees and that they were just providing a service of supplying referees. The case was initially heard in 2018 before the First Tier Tribunal (FTT), which allowed PGMOL’s appeal. The FTT disagreed with PGMOL that there was no legally enforceable contract, but held that it was not a contract of employment. The key point that led to the decision was that PGMOL was not obliged to provide work and the referees were not obliged to accept any appointments. The FTT also found that contracts for individual matches did not meet the level of mutual obligation or control for a conclusion to be reached that an employment existed. The ability to not take up an appointment without penalty was also key. HMRC appealed the decision to the UTT on the points around mutuality of obligation. HMRC argued that mutuality of obligation was only relevant when considering whether a contract existed. If, as the FTT concluded, a contract did exist then the point was not relevant when considering whether the contract covered the provision of services or an employment arrangement. The UTT disagreed and, following other case law, concluded that mutuality of obligation should be considered when looking at the type of obligations imposed by a contract on top of whether a contract exists. The UTT held that there had to be an obligation to provide work, or pay a retainer when no work is provided, and not just an obligation to pay when work is done. In addition, there had to be an obligation on the referee to undertake some work. As neither of these existed, the UTT held that, whilst a contract did exist, there was insufficient obligation on either party for it to be considered a contract of employment. There were some obligations placed on referees, such as being expected to be readily and regularly available for appointment, but it was noted that these were not legal obligations. There was also insufficient mutuality of obligation within contracts covering individual appointments. These were also, therefore, held not to be contracts of employment. A key factor was the ability for the referee and/or PGMOL to cancel these contracts at any time before the match without any penalty for breach of contract arising. The UTT rejected HMRC’s appeal on the above grounds. In addition, whilst it was not necessary to decide the case, the UTT also commented on the question of control, saying that there is a requirement for an enforceable contractual right to direct how a referee should undertake an appointment. The FTT had concluded that PGMOL had no such control as their only course of action would be to terminate the contract or not to offer future matches. The UTT concluded that terminating a contract was an enforceable right and, therefore, the FTT was incorrect in deciding otherwise. Whilst this conclusion was in HMRC’s favour, the case was already lost on the mutuality of obligation points. This case, and particularly the consideration of mutuality of obligation, will have relevance for anyone considering employment arrangements. It is, therefore, likely that HMRC will appeal the decision to the Court of Appeal and the case will continue. Thus, it may only be half time for the referees! The full decision can be read at the following link:   Kevin Offer may be contacted by e-mail at ‘This email address is being protected from spambots. You need JavaScript enabled to view it.’                                                        

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