The U.K. tax office has won an appeal linked to its long-running battle to reclassify Premier League and FA Cup referees as employees.
The win opens the way for Her Majesty’s Revenue and Customs to collect back taxes for payments made by Professional Game Match Officials Limited to referees for unpaid income tax and national insurance contributions, a soon-to-be-raised U.K. tax on employment.
Lower courts “erred in law in their approaches to the question of mutuality of obligation in the individual contracts,” and the First-Tier Tribunal “erred in law in its approach to the question of control in the individual contracts,” England and Wales Court of Appeal Justice Sir Nicholas Patten said in his judgment published Friday.
PGMOL, set up in 2001, helps organize officials for soccer matches, including the Premier League, FA Cup, Champions League, and international matches.
It classifies 30,000 referees in 10 categories, from trainees to international standard. Of these, PGMOL employs some full-time and some part-time referees known as Level 1, during the two years 2014-15 and 2015-2016 covered mostly Premier League matches.
The part-time referees, who are the subject of the appeal, usually combine refereeing with full-time jobs in other fields. There were 60 such referees in 2014-15.
The tax office argued that these referees were under contract and carrying out the work of employed workers and should have paid income tax and national insurance contributions on payments made to them from PGMOL. During the years 2014-15 and 2015-16, on which the case focuses, on they would owe 583,874 pounds ($805,000) excluding interest.
PGMOL appealed, and in a 2018 judgment the FTT sided with the company, concluding that HMRC had failed to prove that the contracts in question showed PGMOL had control over the part time referees.
HMRC appealed to the Upper Tier Tribunal tax chamber, which in May 2020 upheld the lower court judgment. HMRC then appealed to the Court of Appeal, which today decided that the two lower courts had made an error in law when they failed to properly apply threshold tests for determining the difference been a contractor and an employee.
HMRC declined to comment. PGMOL didn’t immediately respond to a request for a comment.