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When a Whistle Blows for IR35: What the PGMOL Case Means for Employment Agencies

12 Nov, 20263 minutes

By Jai Garcha – Head of Legal at Hamilton Barnes | PGMOL v HMRC: a landmark IR35 lesso...

By Jai Garcha

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When a Whistle Blows for IR35: What the PGMOL Case Means for Employment Agencies

By Jai Garcha – Head of Legal at Hamilton Barnes | PGMOL v HMRC: a landmark IR35 lesson....

Why a case about referees should worry anyone who supplies labour

A dispute about whether part-time football referees were employees or self-employed took six years to travel from a tax tribunal to the UK Supreme Court and back. It is tempting to file it under “sport.” For agencies like Hamilton Barnes, that would be a mistake.

Revenue and Customs Commissioners v Professional Game Match Officials Ltd (“PGMOL”) reshaped the two tests at the heart of every employment-status question - mutuality of obligation and control - and those same tests sit underneath IR35, the off-payroll working rules, and the agency tax legislation.

If you place contractors, run an umbrella, or engage people through personal service companies, PGMOL now frames how HMRC - and you - decide who is genuinely self-employed.

The facts and the journey

PGMOL supplies match officials to English football. The dispute concerned its part-time “National Group” referees, engaged under a season-long overarching contract plus a separate contract for each match, formed when PGMOL offered a game and the referee accepted it. Either side could pull out before the referee reached the ground, without penalty. HMRC said the referees were employees, so match fees should have gone through PAYE.

The case changed hands repeatedly - a warning in itself about how finely balanced status is. The First-tier Tribunal (2018) found the individual contracts were not employment, failing on both mutuality and control. The Upper Tribunal (2020) upheld no mutuality but found an error of law on control. The Court of Appeal (2021) allowed HMRC’s appeal on both and remitted. The Supreme Court (16 September 2024) dismissed PGMOL’s appeal, holding that the “irreducible minimum” of both mutuality and a sufficient framework of control was present in each match contract - but it did not find the referees were employees, remitting instead for the final overall assessment. On that remittal the First-tier Tribunal (2026) held the engagements were contracts for services: the control was regulatory and developmental, not managerial, so the third stage failed. (A first-instance decision, which may be appealed.)

So PGMOL won on the ultimate question - but only after the Supreme Court had markedly lowered the threshold HMRC must clear to get a status case off the ground.

The test, refined

Status turns on the three-stage test in Ready Mixed Concrete (South East) Ltd v Minister of Pensions: (i) personal work for pay (mutuality); (ii) control “in a sufficient degree”; and (iii) other terms consistent with employment. PGMOL refined the first two.

Mutuality. A contract of employment can exist for the working period alone, so a casual worker may have a series of such contracts; no obligations need pre-date the engagement. Critically, a right to cancel without penalty before performance is irrelevant at stage one - while the contract subsists, mutual obligations exist. It is, at most, a factor at stage three. Had it bitten at stage one it would have been fatal; relegated to stage three it is one factor among many.

Control. What matters is “lawful authority to command so far as there is scope for it,” even in only incidental matters - a “sufficient framework of control.” An engager need not be able to intervene in every aspect of performance; referees, like surgeons or a conductor, work with independence, yet PGMOL’s own Select Group referees, with the same independence, were accepted employees. The framework here came from conduct obligations, assessment and coaching systems, and post-engagement sanctions such as withholding future matches.

The weight shifts to stage three. Mutuality and control are necessary but not sufficient, and the control bar “need not be set at an unduly high level”. The real contest is now the overall, fact-sensitive assessment - exactly the kind of judgement no checklist captures. The remitted decision proves it: stages one and two were cleared, yet the referees were still self-employed.

Why this reaches IR35 and the off-payroll rules

IR35 and the off-payroll rules strip away an intermediary, usually a PSC, and ask whether the worker would otherwise have been the client’s employee. That question uses the same Ready Mixed Concrete test: ascertain the contracts, build a hypothetical direct contract, then apply the status case law. PGMOL is now part of that case law, so a hypothetical contract is marginally easier to cast as employment - with the outcome thrown onto the unpredictable third stage. A practical casualty is HMRC’s CEST tool, which does not weigh the degree of mutuality and control in the way PGMOL demands. Relying on CEST alone is now riskier than it looks.

What it means for agencies

Agency legislation (s.44 ITEPA 2003). A worker personally supplying services to a client via an agency is treated as the agency’s employee for tax, with all pay taxed as earnings. The escape route is the “supervision, direction or control” (“SDC”) carve-out - but if any one of supervision, direction or control is present or even capable of applying, it is lost, and HMRC wants documentary evidence, not a worker declaration.

PGMOL’s generous reading of control makes “no control” harder to assert, and HMRC already treats SDC as a lower bar than the common-law test, meaning an agency can face PAYE even on a genuinely self-employed worker.

Off-payroll rules and the chain. Where the client is a public authority or a medium/large private entity, the Chapter 10 rules put the status duty and PAYE risk on the client (the agency legislation takes precedence where it applies).

But agencies remain exposed:

The client must issue a Status Determination Statement to the worker and the party it contracts with, passed down the chain.
The deemed employer who operates PAYE is generally the feepayer, usually the agency nearest the intermediary.
Even where the client takes reasonable care but gets it wrong, liability rests with the deemed employer - the agency can carry a PAYE bill for a decision it did not make.
If the deemed employer defaults, HMRC can recover up the chain from the first agency, or the client, in that order.

Practical takeaways

Drop the “right to cancel” as a shield. It no longer defeats status at the threshold; while an assignment is live, mutual obligations exist.
Re-examine “we don’t control them.” Control can come from quality frameworks, codes of conduct, assessment regimes and post-engagement sanctions - not just hands-on direction.
Treat CEST as a start, not an answer. Back borderline calls with a reasoned stage-three analysis.
Determine status before work starts, with reasons.No blanket assessments; careful role-based ones can work.
Map supply-chain liability. Know the fee-payer and deemed employer, pass SDSs on in time, and price in HMRC’s reach to the first agency in the chain.
Expect fact-sensitive outcomes.Each case turns on its own facts - build arrangements that survive a real stage-three review, not a tick-box.

Conclusion

PGMOL is a case about referees that reads like a warning to recruiters. The Supreme Court did not declare the officials as employees. In the end, a tribunal held they were not.

What it did was recalibrate the tests every agency relies on when it decides a contractor is "outside" employment: mutuality is easier to find, control is easier to establish, and the decisive judgement now happens at the stage least amenable to automation.

For employment businesses, the message is to revisit the contractual terms and status processes they have treated as settled - because the ground beneath them has shifted.