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Markel Tax

04 Jun 2020

A question of MOO: PGMOL v HMRC at the UT

As HMRC loses its employment status case against the provider of professional football referees on appeal to the Upper Tribunal, by failing to demonstrate mutuality of obligation, Jacqui Mann explains why this decision has important ramifications for other MOO-based status challenges.

While there is never a shortage of cases going through the Tribunal system focusing on the issue of employment status, HMRC’s latest defeat at the Upper Tribunal is pivotal because of the renewed confirmation it provides on the issue of mutuality of obligation. It highlights too the failings in HMRC’s approach to the status tests surrounding this particular measure. Mutuality of obligation has long been something that HMRC has downplayed; something I have seen happen on many occasions in disputes on both employment status and IR35 reviews. This judgement is long overdue and gives very welcome clarity on the issue and potentially has far reaching implications.


Professional Game Match Officials Ltd (PGMOL), provides the match officials for football clubs in the top four flights of professional football under the remit of the FA, Premier League and Football League. The appeal concerned the employment status of the part-time referees who provide their services as officials at matches.

Established principles

The principles established in the Ready Mixed Concrete case of 1968 are of course, well known to those interested in status cases. The master-servant language may be a little outdated but, despite this, these guiding principles are the critical foundations against which all decisions surrounding employment status are made and so are repeated below for good measure!

  1. The servant agrees that, in consideration of a wage or other remuneration, he will provide his own work and skill in the performance of some service for his master.

  2. He agrees, expressly or impliedly, that in the performance of that service he will be subject to the other’s control in a sufficient degree to make that other master.

  3. The other provisions of the contract are consistent with it being a contract of service.

However, the quality of status decisions at HMRC local level relies on the interpretation of the evidence and the willingness of the interpreter in authority (HMRC) to take an unbiased approach, which is where it has so regularly fallen down in the past, because as Judge Dr Williams stated in the case of Lewis (T/A MAL Scaffolding Ltd) (2006) SpC 527:

'The [HMRC] appear to have approached their investigations on the basis that there must be an employment relationship between MAL Scaffolding and the workers there if one looks hard enough. Officers then went looking on that basis and persuaded themselves that they had found that for which they went looking. They have totally failed to persuade me.'

These words are as relevant now as when they were reported in 2006 and certainly have some resonance in this case. 

FTT decision

The decision at the FTT turned on the facts surrounding the lack of mutual obligations; consideration being given to the two levels of contractual arrangements. Firstly, an overarching contract, based on a yearly agreement at the beginning of each football season to provide services, which set out the terms under which the referees would be engaged and secondly, the individual match by match agreements. 

It was found that the overarching contract provided no guarantee or promise of any work and could not therefore result in an employment relationship. Consideration was therefore given to the individual match by match assignments.

Since there was no right to substitute, personal service was required by the individual referee in accepting an offer to officiate at a match. However, pertinently, it was found that the referees had an unfettered right to renege on the initial agreement, as did PGMOL. As such, as there is no obligation on either side to continue with the agreement, Judge McKenna’s first crucial test is not met.

While the lack of mutuality is, on its own accord, sufficient to render the contract incapable of being one of service, the Tribunal did consider the other two strands of the critical tests.

In terms of control, the FTT found that there was insufficient control over the referees. The PGMOL provides a raft of documentation including, for example, a code of practice. However, these were primarily concerned with ensuring compliance with the wider rules of the game, whereas during the provision of the services, acting as an official in a match, there could be no interference from PGMOL.

In terms of the other factors, the FTT found that these were weighted towards an employment scenario, however, the absence of mutuality of obligation was key and in the absence of at least one of the crucial factors required to create a contract of service, the appeal was allowed.

Upper Tribunal

The UT hearing concentrated, unsurprisingly, on the issue of mutuality of obligation. It did so in some considerable detail, disagreeing with HMRC’s contentions that the mutual obligation test is met simply due to the offer and acceptance of a piece of work. The UT also dismissed HMRC’s argument that the various documents supplied to referees as part of the annual sign-up amounted to legal obligations to provide services. HMRC’s argument was based on the content of one of those documents, the Code of Practice, which suggested that referees are ‘expected’ to ‘adhere to’, or to do, various things including being ‘readily and regularly available for matches’. This view was not upheld, with the UT pointing out that an expectation is not the same thing as an obligation.  Importantly, language used in the drafting of the Code of Practice, which included references to both the terms ‘obligation’ and ‘expectation’ shows that there is understanding of the difference between these two terms on the part of PGMOL and the referees to whom those terms are provided.  

The UT helpfully set out its interpretation of what constitutes the required level of mutual obligations:

  • For the employee, the minimum requirement is an obligation to perform at least some work and an obligation to do so personally. In line with the principles of substitution, it would be inconsistent with that obligation if the employee could decide never to turn up for work.

  • The minimum requirement on an employer is an obligation to provide work or, in the alternative, a retainer or some form of consideration (which need not necessarily be pecuniary) in the absence of work. 

  • In both cases, the obligations must subsist throughout the whole period of the contract.

The conclusion drawn by the UT was that HMRC’s real complaint was that it disagreed with the conclusion the FTT had reached.

The UT also reaffirmed the FTT’s conclusions that the right of the referee to withdraw from an engagement, without sanction and without breaching the contract, or for PGMOL to cancel an engagement once made, was inconsistent with the suggestion of a contract of service.  

The UT did not consider in detail the issue of control, because there was no need to; the absence of one of the trinity of factors, mutuality of obligation, was sufficient. That said, while the UT confirmed that there had been no error of law in the FTT’s conclusions regarding mutuality of obligation, the UT did comment that the FTT had erred in law with regard to control, but this did not necessarily mean that the control was sufficient to render them employees.   


HMRC has been persistently intransigent in its consideration of mutuality of obligation, however, there is cause to hope that this latest view and clarification, in what is a binding decision from the UT, must now help to unblock that impasse.  HMRC’s existing view of MOO is not sustainable and is not what was intended when Justice McKenna cited it as one of the critical factors which needed to be present before a contract of service could be said to exist way back in 1968.

HMRC has, however, said it will appeal the PGMOL UT decision. I recently had cause to contact HMRC on a case which looks as if it may well be headed for the First-tier Tribunal, to ask them to consider the merits of the case in the light of PGMOL. The response provided was as follows:

HMRC is disappointed with the findings of the UT and is therefore appealing to the Court of Appeal.  As HMRC believes the material facts in your client’s case are different to those in the PGMOL case it will be pursuing this matter to the FTT. 

HMRC should have perhaps taken heed of Judge Dr Williams comments in the MAL Scaffolding case, in 2006, instead of which it has continued to interpret case law to suit its own ends and it seems that, even in the light of a binding decision, HMRC still seems unprepared to accept the findings. I am puzzled as to the basis of HMRC’s likely appeal because the UT were very thorough in their consideration of mutuality of obligation. The UT suggested that the FTT erred in terms of control, thereby giving possible grounds for appeal on the point of control, but given the attention paid to the mutuality of obligation argument, it seems unlikely that this would be overturned, even in the unlikely event that the control issue was ultimately subject to any reconsideration. It is also possible that HMRC simply need some further time to consider their position and perhaps come to terms with the loss on appeal before they finally concede the point. We will see!

HMRC’s approach to this case is unfortunately consistent with their general approach to this area of tax law; the dogmatic attitude and continued refusal to accept anything other than their own biased view of mutuality of obligation is nowhere more obvious than within the CEST tool.   With the IR35 private sector off payroll working rules due to commence in April 2021, it is time that HMRC understood the impact of its actions on the livelihoods of many people.   

Jacqui Mann is member of Markel Tax’s tax Investigations team and is a specialist in employment tax matters and IR35. Please email for any queries or call 0333 920 5708.

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