The Supreme Court unanimously dismissed PGMOL’s appeal in HMRC v Professional Game Match Officials Ltd [2024] UKSC 29 (see article). For me though, it was a bit of an anti-climax because the court remitted part of the decision back to the FTT. So, again, we wait – and this is part of the problem. What if the FTT errs again?
Although the Supreme Court has clarified a couple of points essentially, I don’t feel we are much further forward. I say this not in technical legal terms, because there are some very useful points, but for the average person who has to assess employment status regularly.
The single engagement: The Supreme Court did give judgment on the first two stages of the Ready Mixed Concrete ([1968] 2 QB 497) test. The court held that both mutuality of obligations and control were present, but that this still does not mean that it is a contract of employment. The point of interest here is the focus on the ‘single engagement’. Could the single engagement be an ad hoc contract of employment, however brief? Yes, the Supreme Court said.
Ad hoc employees: This could be an interesting point from an employment perspective. Are we now going to have a class of ad hoc employee who can never get full employment rights because of a lack of continuity? They can join the deemed employees who have zero rights under the inside IR35 assessments!
Basic contractual obligations: Anyway, for keen observers of employment status case law, this is actually nothing new. The Supreme Court agreed with Lady Justice Elizabeth Laing DBE in PGMOL in the Court of Appeal (and not to blow my own trumpet, but I have been saying this for as long as I can remember).
It makes perfect sense that where there are contractual obligations, there are mutual obligations. The factor of mutuality’s origins lie in employment rights cases. Specifically, it was used to assess whether a person was employed in the gaps between assignments, i.e. not when they were working.
From a tax law perspective, however, you will always be looking at the period of time when you are working. So mutuality of obligations, as a test of employment status for tax purposes, is not good. I am glad to see that the Supreme Court judgment acknowledges it but ensures that it is not decisive.
HMRC won: Of course, HMRC have also been saying this for a very long time. In fact, part of the logic of their CEST tool is based on there being a contract in place because it represents mutual obligations. The argument levelled at CEST is that it doesn’t include mutuality, which it should because it is a critical test.
The CEST tool is much maligned as is HMRC on employment status and of course, IR35 or off-payroll working. Unfortunately, however, HMRC are winning hands down on employment status and IR35 case law at the moment. Remember though that these are carefully selected cases, so a thorough understanding of case law is imperative to showing a compliant position.
The third stage of RMC: So, it all boils down to the third stage of the RMC and this is the domain of the fact-finding tribunal. There has been plenty of advice in recent case law on the third stage, but I fear that this stage is going to be fraught with difficulty. That’s partly because of the potential for legal errors but also because HMRC is routinely fielding King’s Counsel, even at the FTT.
And so the employment status saga continues unabated...
Home >Articles > The Supreme Court’s decision in PGMOL
The Supreme Court’s decision in PGMOL
The Supreme Court unanimously dismissed PGMOL’s appeal in HMRC v Professional Game Match Officials Ltd [2024] UKSC 29 (see article). For me though, it was a bit of an anti-climax because the court remitted part of the decision back to the FTT. So, again, we wait – and this is part of the problem. What if the FTT errs again?
Although the Supreme Court has clarified a couple of points essentially, I don’t feel we are much further forward. I say this not in technical legal terms, because there are some very useful points, but for the average person who has to assess employment status regularly.
The single engagement: The Supreme Court did give judgment on the first two stages of the Ready Mixed Concrete ([1968] 2 QB 497) test. The court held that both mutuality of obligations and control were present, but that this still does not mean that it is a contract of employment. The point of interest here is the focus on the ‘single engagement’. Could the single engagement be an ad hoc contract of employment, however brief? Yes, the Supreme Court said.
Ad hoc employees: This could be an interesting point from an employment perspective. Are we now going to have a class of ad hoc employee who can never get full employment rights because of a lack of continuity? They can join the deemed employees who have zero rights under the inside IR35 assessments!
Basic contractual obligations: Anyway, for keen observers of employment status case law, this is actually nothing new. The Supreme Court agreed with Lady Justice Elizabeth Laing DBE in PGMOL in the Court of Appeal (and not to blow my own trumpet, but I have been saying this for as long as I can remember).
It makes perfect sense that where there are contractual obligations, there are mutual obligations. The factor of mutuality’s origins lie in employment rights cases. Specifically, it was used to assess whether a person was employed in the gaps between assignments, i.e. not when they were working.
From a tax law perspective, however, you will always be looking at the period of time when you are working. So mutuality of obligations, as a test of employment status for tax purposes, is not good. I am glad to see that the Supreme Court judgment acknowledges it but ensures that it is not decisive.
HMRC won: Of course, HMRC have also been saying this for a very long time. In fact, part of the logic of their CEST tool is based on there being a contract in place because it represents mutual obligations. The argument levelled at CEST is that it doesn’t include mutuality, which it should because it is a critical test.
The CEST tool is much maligned as is HMRC on employment status and of course, IR35 or off-payroll working. Unfortunately, however, HMRC are winning hands down on employment status and IR35 case law at the moment. Remember though that these are carefully selected cases, so a thorough understanding of case law is imperative to showing a compliant position.
The third stage of RMC: So, it all boils down to the third stage of the RMC and this is the domain of the fact-finding tribunal. There has been plenty of advice in recent case law on the third stage, but I fear that this stage is going to be fraught with difficulty. That’s partly because of the potential for legal errors but also because HMRC is routinely fielding King’s Counsel, even at the FTT.
And so the employment status saga continues unabated...
