HMRC’s Referee Defeat

HMRC has suffered another defeat in one of the UK’s longest-running employment status disputes.

In May 2026, the tribunal again ruled that football referees engaged by Professional Game Match Officials Limited (PGMOL) were self-employed rather than employees for tax purposes. The dispute, involving around £584,000 in tax liabilities, has now been running for almost a decade.

Although the case centres on professional football referees, the underlying issues affect thousands of UK businesses. Construction firms, consultants, IT companies and property businesses all rely heavily on contractors and self-employed workers. The same employment status rules apply across all of them.

That is what makes the PGMOL case so significant. Even after years of litigation, HMRC and the courts still reached very different conclusions on how the arrangements should be treated.

Background to the Employment Status Dispute

The case involved referees engaged by PGMOL between 2014 and 2016. HMRC argued the officials should have been treated as employees, meaning PAYE and National Insurance should have been deducted.

PGMOL maintained that the referees were self-employed because appointments were accepted individually, with no obligation to provide or accept ongoing work.

This type of dispute is far from unusual. Employment status remains one of the most heavily contested areas of UK tax law, particularly since the IR35 reforms increased scrutiny of contractor arrangements.

The financial consequences can be severe. Businesses found to have incorrectly treated workers as self-employed may face liabilities for unpaid PAYE, National Insurance, interest and penalties stretching back several years.

Timeline of the employment status case

The dispute has moved through several courts and tribunals:-

• August 2018 – The First-tier Tribunal ruled the referees were self-employed.
• May 2020 – The Upper Tribunal dismissed HMRC’s appeal.
• September 2021 – The Court of Appeal referred the matter back for reconsideration.
• September 2024 – The Supreme Court clarified aspects of the legal framework surrounding employment status assessments.
• May 2026 – The tribunal again ruled the referees were self-employed.

HMRC is reportedly considering whether to appeal again.

The length of the case highlights the wider problem facing businesses. Employment status disputes can take years to resolve, creating prolonged uncertainty and significant professional costs.

Why HMRC lost the employment status case

Employment status cases are rarely decided on a single factor. Courts normally assess the overall working relationship rather than relying solely on contractual wording.

Several key tests are usually considered:-

• the degree of control
• mutuality of obligation
• personal service requirements
• financial risk
• independence

In the PGMOL case, the tribunal focused heavily on the absence of guaranteed ongoing work. Referees accepted individual appointments rather than operating under continuous employment arrangements.

Professional standards and oversight existed, but the tribunal found them insufficient to create a traditional employment relationship.

That distinction matters because many businesses mistakenly assume that supervision or compliance requirements automatically point towards employment. In reality, self-employed contractors often operate within structured and regulated environments.

The courts continue to focus on practical working arrangements rather than labels alone.

A business may describe someone as self-employed in a contract. However, if they work fixed hours under close supervision with little independence, HMRC may still argue the relationship resembles employment.

Criticism of HMRC’s CEST employment status tool

The recent ruling has also reignited criticism of HMRC’s Check Employment Status for Tax (CEST) tool.

Critics argue the tool oversimplifies a highly complex area of law and struggles to reflect how tribunals assess real-world working arrangements. That criticism has existed since CEST was introduced in 2017.

The underlying issue is that employment status rarely depends on one single factor. Tribunals examine multiple aspects of the relationship together, often placing different weight on individual elements depending on the circumstances.

This creates obvious challenges for businesses seeking certainty.

A company may complete a CEST assessment in good faith and still face an HMRC challenge years later. Different advisers can also review the same arrangement and reach different conclusions.

The PGMOL case demonstrates just how subjective employment status disputes can become.

What businesses should learn about employment status

This case contains several important lessons for businesses using contractors and freelance workers.

First, contracts alone are not enough. If day-to-day working practices differ from the written agreement, tribunals will usually place greater weight on the practical reality of the relationship.

Second, employment status reviews should not be treated as one-off exercises. Contractor relationships often evolve over time, particularly where workers become integrated into the business.

Third, consistency matters. HMRC increasingly uses data analysis and cross-checking systems to identify discrepancies involving payroll, invoices and contractor payments.

Sectors heavily reliant on contractors remain particularly exposed, including:-

• construction
• consultancy
• IT services
• logistics
• healthcare
• property services

For many businesses, the uncomfortable reality is that employment status reviews are no longer something that can be postponed indefinitely.

Why employment status rules remain so difficult

The broader issue exposed by the PGMOL case is the continuing complexity of UK employment status law.

After years of litigation and multiple appeals, the courts still needed to reconsider the same arrangements under revised legal guidance. That alone demonstrates how difficult it is to apply these rules consistently.

Modern working patterns have only added to the uncertainty. Flexible contracting, consultancy arrangements and freelance work have blurred many of the traditional boundaries between employment and self-employment.

At the same time, HMRC continues to focus heavily on compliance in this area because of the tax revenues at stake. The result is a system where many businesses struggle to apply the rules confidently, even with professional advice.

Conclusion

HMRC’s latest defeat in the PGMOL case is another reminder that employment status remains one of the most difficult areas of UK tax law.

The ruling reinforces a point the courts have repeatedly made: employment status depends on the practical reality of the working relationship, not simply the wording of a contract or the result of an online assessment tool.

Businesses that use contractors, consultants and self-employed workers should review their arrangements regularly rather than wait for HMRC scrutiny.

At Wilkins Southworth, we advise businesses on employment status reviews, IR35 concerns and HMRC disputes. If you are unsure whether your current arrangements could attract HMRC attention, our team can help you assess the risks and strengthen your position.