FTT to revisit their decision after VAR intervention

This article looks at the recent judgment from the Supreme Court (SC) in the matter of HMRC v Professional Game Match Officials Ltd (PGMOL).  For those that engage self-employed subcontractors, limited company contractors or have encountered the issue of employment status, then understanding the impact of this judgment is a must.

The outcome of the SC’s judgment is that PGMOL’s appeal on the issues of mutuality of obligations (MOO) and control has been dismissed.  The SC found that there was sufficient MOO and control present between PGMOL and the referees to merit consideration as to whether the referees were employed by PGMOL based on all the relevant circumstances.  Accordingly, the SC has now remitted the matter back to the First Tier Tribunal (FTT) to make this determination.

So, without a final decision emanating from the SC on this matter, why is it so important?

1. The SC made some considerable findings on the issue of MOO.  It essentially split MOO into two levels.  The first is the MOO necessary to bring a contract within the employment sphere.  The second is the MOO sufficient for the contract to be one of employment.  The necessary level of MOO is determined at stage one of the much-cited Ready Mixed Concrete (RMC) case.  The sufficient level of MOO is determined at the third stage of the RMC test when a tribunal considers all the relevant terms of the contract between the parties with a view to assessing whether it is contract of service or for services.
2. On the issue of control, the SC reiterated some important points.  The level of control required for a matter to proceed to stage three of the RMC test is for tribunals to find a sufficient framework of control.  In PGMOL the SC found the fact that PGMOL could not intervene during the matchday activities did not prevent the sufficient framework of control existing.
3. The judgment is from the SC and therefore is binding on all applicable cases that are heard below this level.  As such, the dicta are important, should be taken on board and over time engagements should be reviewed.
4. While the findings from the SC are important and must be considered, by remitting the matter to the FTT to determine status reasserted the principle that first instance tribunals (whether tax or employment) are the fact-finding jurisdiction and the appropriate forum to determine status on all the circumstances.

With points 3 & 4 in mind, it is vital for businesses to separate out the scaremongering from what they should actually be doing in response to this judgment.  This judgment represents a significant step in the development of case law on employment status.  There have been significant steps in the past and there will be significant steps in the future.  What the judgment does not do however, is provide findings as to what factors will be relevant to finding the sufficient level of MOO at stage three of the RMC test.  This will develop over time, and we will keep you updated.

While it is not the time to adhere to scaremongering, many businesses may want to review their contractual arrangements in light of this judgment or will have questions as to how the judgment affects their particular circumstances.  As such, our team are available for consultations, webinars, seminars or question & answer sessions on the judgment.  If this is of interest, get in touch with your usual contact or contact us for information on how to book time with a team member.