English football referees have won a First Tier Tribunal case against HMRC’s attempt to classify them as employees rather than self-employed for the purposes of Pay As You Earn (PAYE) and National Insurance Contributions (NICs). The case highlights the complexity that can exist in determining a person’s employment or self-employment status.
Whilst a select group of the top English football referees are employed full-time by PGMOL (Professional Game Match Officials Limited) most referees in professional English football referee in their spare time, often alongside having other employments or business interests.
HMRC considered that these “part-time” referees were employees of PGMOL thus requiring the application of PAYE and the payment of Class 1 NICs by employer and employee. HMRC assessed the “unpaid" amounts as due by PGMOL. However, PGMOL argued that it was not employing these referees and that the referees were in fact self-employed. As a result, PGMOL argued that it was not responsible for operating PAYE or paying any NICs and instead, any tax due is the responsibility of the self-employed referee.
The case was decided on the facts of the employment vs self-employment argument which is one which is continually being brought into question. HMRC lost this case because the judges disagreed with how HMRC had construed the key requirements for an employment relationship.
This area is an extremely complex one and those whose positions are unclear would be well advised to seek assistance from a tax advisor or lawyer. That goes for both contracting parties to the employment / self-employment arrangement as both parties could end up getting stung. It also demonstrates that HMRC assessments on this matter are certainly worth reviewing and may be worth challenging as it is clear that HMRC are not always correctly understanding the law.
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