HMRC scores own goal in key employment status case

22nd July 2021

A key employment status tax case has been heard by the Court of Appeal, the outcome of which could be significant for many other such status cases that are awaiting the decision. 

There are links below (Appeal July 2021) to the hearing which took place 20-22 July 2021.

In HMRC –v- Professional Game Match Officials Ltd (PGMOL) the issue is whether certain referees engaged to officiate at 5 football matches by PGMOL were at the relevant time employees of PGMOL (being engaged under contracts of service) or were self-employed (being engaged under contracts for services) for the purposes of income tax and national insurance contributions (NICs).

As explained below, the First Tier Tribunal (FTT) held that the referees were not employed under contracts of service for the periods under appeal., finding that

  1. There was no mutuality of obligation outside individual engagements and on that basis the Overarching Contract was not a contract of employment; and
  2. There was insufficiency of mutuality of obligation and insufficiency of control in the Individual Contracts, such that they also were not contracts of 25 employment.

The Upper Tribunal (UT) upheld the FTT's decision finding that there had been no error of law.

As HMRC does not want to lose the case, it decided to appeal the Court of Appeal.

Employment status is a hot issue, since the government wanted to impose a responsibility on private organisations from April 2021 to determine the status of any contractors they engage (off-payroll working).

The PGMOL case casts doubt over HMRC’s stance on employment status and in particular that its CEST tool – which it wants engagers to use in determining status – is accurate in not including the concept of mutuality of obligations


The case of Professional Game Match Officials Limited (PGMOL) v HMRC (UT decision) was initially heard by the First Tier Tribunal back in July 2018.

The case related to determinations issued by HMRC relating for 2014/15 and 2015/16 on the basis that the PGMOL was the employer of certain football referees during three football seasons.  

There was a significant amount of tax and national insurance at stake. 

Our opinion

The case clearly shows that HMRC’s definition and understanding of what mutuality of obligations means is too narrow. It is possible for mutuality of obligations to help conclude whether a contract is one of employment or not. 

As mutuality of obligations is not even considered in the CEST tool, this places further doubt as to the relevance of this tool for businesses in deciding on employment status issues. 

Appeal 20-22 July 2021

The UT's decision is a binding judgement, subject to any change that may arise from the Court of Appeal's findings.

The 3-day hearing began on 20 July 2021 (Court 63) and was streamed on YouTube. Each session was recorded so that it can be watched later.

HMRC's barrister is Akash Nawbatt QC.

Taxpayer's barrister is Jonathan Peacock QC.

It is not clear how long the Court of Appeal will take to consider its decision, but it could be many weeks or months.

It cannot be discounted that whatever the outcome, an appeal will then be made to the Supreme Court for a final decision.

That being the case, we could be a long time away from clarity, leaving other status cases in limbo and the viability of HMRC's CEST tool in doubt until that final decision.

Initial First Tier Tribunal (FTT) Hearing

The original summary from the FTT can be found here. The facts of the case are as follows. 

PGMOL is effectively owned and controlled by the three main English football bodies (the FA, Premier League and the Football League). It provides match officials for competitive games.  

PGMOL have a number of referees who are employed on a full-time basis (who generally officiate at Premier League and some international matches). Other referees, however, provide their service in their spare time (frequently around full time employment) and these are the ones who the case centered around. 

Although the costs of paying the referees (fees and travel expenses) are borne by the member organisations, it is PGMOL who actually make the payments to the referees. 

To counteract HMRC’s decision that these referees were employees, PGMOL argued initially that the referees were not under any contract with them and so there could not be an employment contract in place. If there was a contract in place, the nature of the contract would not be sufficient to create an employment relationship. 

The case centered around the three qualities that must be present in a contractual relationship for it to be one of employment:

  1. There must be mutuality of obligations (so the referee agrees to provide his own personal service in return for a wage or other remuneration).
  2. There must be a sufficient degree of control
  3. The other provisions of the contract are consistent with its being a contract of service (this is a negative test looking to establish if the referees were in business on their own account)

The Tribunal concluded that there was a contractual relationship between PGMOL and, in reaching this decision, found that there were two levels to this: 

  • an overarching framework which covered the football season in its entirety and set out the relevant terms of engagement; and 
  • agreements for each match the referees were engaged for.

The Tribunal agreed that there was no guarantee or promise of work in the overarching framework and therefore this did not constitute an employment relationship. 

With respect to the individual agreements, the Tribunal concluded that there was no right to appoint a substitute and therefore personal service was required. Normally this would be sufficient for mutuality of obligations to be satisfied; however, in this case, even after acceptance of the contract, the referees had an unfettered right to cancel each arrangement. Therefore, there was no obligation on either side to continue with the engagement and the first test set out above was not met. 

Although the Appeal was allowed at this stage. The Tribunal also noted that the referees claimed there was no control over where they were sent. The Tribunal did consider that this did not reflect the legal position as the referees could state a geographical preference and they could also refuse any engagement offered. 

The Tribunal also considered that PGMOL did not exercise sufficient control over the referees, as much of what they provided was guidance rather than control. The control that existed was more to ensure compliance with the rules of the game rather than being specific requests from PGMOL.

Another key point was that, whilst the games were in operation, it was the referees who were in charge. 

Finally, the Tribunal did consider that the other factors in the relationship were more supportive of there being an employment relationship. However, due to the lack of mutuality of obligations, HMRC lost its case.

Upper Tribunal (UT) Appeal

The Appeal was heard at the end of January 2020.

HMRC appealed against the FTT decision that there was insufficiency of mutuality of obligation in the overarching framework and that there was insufficiency of mutuality of obligation and of control in the individual agreements. 

Mutuality of obligations

In this appeal, the UT consider HMRC’s viewpoint that “Mutuality of obligation is relevant only to the questions of whether there is a contract at all…  and not to the question whether such contract is one of employment or a contract for services”. 

The UT quote Langstaff who, in a previous EAT case (Cotswold Developments Construction Ltd v Williams), stated that: 

“47. Mutual obligations are necessary for there to be a contract at all. If there is a contract, it is necessary then to determine what type of contract it is. If it is a contract of employment, consequences will follow of the greatest significance — not only in terms of whether the 35 employee is entitled to, and the employer subject to, those rights and duties conferred by statute upon employees and employers alike, but also common law considerations such as whether the employer may be, for instance, vicariously liable for the torts of the employee. The concept may be essential in determining whether there has been 40 actionable discrimination on the ground of sex, race or disability. These matters are determined by the nature of the mutual obligations by reference to which it is to be accepted that there is a contract of some type

48. We therefore do not see any necessary inconsistency between paragraph 18 of the judgment in Bamford when contrasted with paragraphs 11–14 of Stephenson or paragraphs 60 and 86 in Dacas. It cannot simply be control that determines whether a contract is a contract of employment or not. The contract must also necessarily relate to mutual obligations to work, and to pay for (or provide) it: to what is known in labour economics as the “wage-work bargain”. (emphasis added).   “

In considering HMRC’s argument, as opposed to numerous decisions previously made, the UT stated that they “reject HMRC’s contention that the requirement that there be mutuality of obligation is irrelevant to the categorisation of the contract as one of employment or one for services, beyond merely requiring that the services be performed personally… It is an essential requirement in categorising a contract as one of employment.” 

Considering the content of mutual obligations, HMRC argued that “it was sufficient to constitute an employment contract if the obligation on the employer was to do no more than retain the worker on its books”. The UT decided that it was necessary to read wider than the passage in which HMRC had relied. 

On the basis of the authorities quoted, the UT derived the below propositions as to the required content of the mutual obligations: 

  • the minimum requirement on an employee is an obligation to perform at least some work and an obligation to do this personally
  • the minimum requirement on an employer is an obligation to provide work or a retainer or some form of consideration in the absence of work. They state “We think it is insufficient to constitute an employment contract if the only obligation on the employer is to pay for work if and when it is actually done “
  • The obligation must subsist throughout the whole period of the contract. 

UT agreed with the FTT’s conclusion on mutuality of obligations and considered that “HMRC’s real complaint is that it disagrees with the conclusion the FTT reached”.

Turning to the individual contracts, the UT again stated that the FTT were entitled to find that the right of the referee, who accepted an engagement to officiate at a single match, to withdraw from that single engagement, was inconsistent with the obligations of an employee”. The FTT were also entitled to conclude that there was an insufficient mutuality of obligations in these contracts. 


Although this did not need to be considered, the UT did consider this for completeness and came to the conclusion that the FTT did err in its judgement on this side. However, as this would make no difference in this case, no further analysis was undertaken in this case. 

The UT did confirm that it remains essential that “some sufficient framework of control exists” and they also considered PGMOL’s ability to “step  in” and give instructions to the referees as well as their ability to impose sanctions whilst the contract was in force. They did also consider the length of the contract as opposed to single engagements. 

Further reading

A legal perspective on the case can be read in an article by employment status lawyer and former member of the Office for Tax Simplification, Rebecca Seeley Harris on AccountingWEB.

Further legal explanation of what is mutuality of obligations can be found in her earlier article on the subject.

For more information and guidance about employment status, check out our Employer Solutions Knowledge Hub.

Contact us

If you wish to discuss the implications of this case and how it may relate to your engagement practices, please contact a member of our Employer Solutions team.

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