As per the latest judgement made by the upper tribunal, HMRC lost in its appeal against the football referees engaged by professional game match officials limited (PGMOL). It is proved in the court of law that the referees are engaged under services contract and was not employed by the organisation. The upper tribunal upheld the same decision which was previously taken by the First Tier Tribunal (FTT) on 6th May 2018.
This judgement really put HMRC on the backseat and questions have been pointed out on taxman’s interpretation of mutuality of obligation and on its flawed CEST tool, which proves to be a failure in identifying the employment status of a worker- whether the worker is falling inside or outside the scope of IR35 or off-payroll.
HMRC stated that the referees engaged by PGMOL should be considered as their employees and they should pay the amount of £584,000 as taxes for the period between 2014 and 2016.
In the first tier tribunal 2018, HMRC was defeated on the grounds as there was insufficient mutuality of obligation between PGMOL & the referees engaged by them. Appealing against this decision “Akash Nawbatt QC”, a representative from HMRC argued that whether any such contract is there and whether it contains any obligation of giving services personally, which was later rejected by Justice Zacaroli.
Justic Zacaroli and Judge Thomas Scott announced the judgement and said that there is insufficient mutuality of obligation between PGMOL & the referees on the basis of the following facts:
Justice Zacaroli concluded that the work related “Mutuality of obligation” exist in the following circumstances –
HMRC’s stand on mutuality of obligation faces criticism from many quarters. Statements made by CEO of contractor calculator “Dave Chaplin” are as follows:
HMRC has confirmed that they will appeal against the findings in the Court of Appeal. But for now, the decision made by the upper tribunal is a major overhaul for HMRC’s CEST tool and solidifies the position of mutuality of obligation in law. In our opinion, HMRC should simply accept defeat and make amendments to the flawed CEST tool, which a number of companies are trusting on to assess their contractor workforce.
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Gabi Boghean I have been working as a UK accountant since 2008 and experienced in providing services to various types of businesses. I have completed management level CIMA qualification & a degree in economics. I specialise in handling tax planning, year-end review meetings, IR35 contract reviews, IR35 expert advice, closing down illustrations and assisting with the closing down process as well.
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