HMRC has lost one of the most significant employment status tax cases in recent years, a decade-long dispute with Professional Game Match Officials Limited (PGMOL). The First-tier Tribunal reaffirmed, in a fifth hearing of the case, that the referees were self-employed, applying the legal status principles clarified by the Supreme Court in 2024.
While the decision does not create new legal precedents, it is highly persuasive and, more importantly, demonstrates how the courts now expect status assessments to be carried out in practice.
For corporate firms that engage contractors and sole traders, particularly in regulated or shift-based environments, this ruling carries clear practical implications.
HMRC loses a pivotal status case
After years of litigation, the Supreme Court rejected HMRC's arguments on mutuality and control in September 2024. It referred the case back to the First-Tier Tribunal for reconsideration, which heard it again in November 2025.
The tribunal described the outcome as not a borderline case, reinforcing that employment status cannot be determined by ticking off a few basic preconditions. The FTT is an example of how to apply the principles in a real-world case correctly. For firms, that means even greater certainty.
Mutuality goes beyond payment
The tribunal confirmed that basic mutuality exists whenever work is performed for payment, but what really matters is the nature and extent of the mutual obligations. In the PGMOL case, the referees worked on an assignment-by-assignment basis, with no obligation on PGMOL to offer work and no obligation on referees to accept it, which the tribunal ruled was a strong pointer away from employment, because it showed independence and flexibility in the relationship, rather than one of subordination typically found in employment.
Crucially, the tribunal reinforced the longstanding understood legal argument that regular work or an expectation of future engagements does not create a legal obligation.
For firms that engage contractors on a shift- or project-based basis, this ruling is highly relevant. The absence of obligation between assignments can significantly influence the outcome, even where work is frequent.
A sufficient framework of control is not enough
Another critical clarification is around control.
HMRC has historically taken a broad view, arguing that once a sufficient framework of control exists, employment is assumed unless proven otherwise. The tribunal had already rejected that approach in April 2022 in Atholl House, confirming that the nature and degree of control must be examined. Fundamentally, not all types of control are employment controls.
An important distinction is between regulatory control and managerial control. In PGMOL, much of the structure surrounding referees came from the wider football regulatory framework, including rules, standards, and performance expectations. But the tribunal found that this type of control does not carry the same weight as direct managerial control over how work is performed. For corporate firms, especially those operating in regulated sectors such as healthcare, finance, or engineering, this is a critical point.
Professionals may be subject to strict external standards set by bodies like the General Medical Council (GMC) or other regulators. Still, those requirements do not automatically mean the engager exercises employment-style control. Understanding this distinction can significantly affect status determinations.
Why this matters for shift-based and regulated workforces
The decision will provide reassurance to many organisations that rely on flexible, shift-based workforces. The facts of PGMOL mirror common engagement models across multiple industries, in which workers accept assignments individually, manage their availability, and operate within regulated frameworks. These characteristics are often present in sectors such as healthcare, where professionals may work shifts while being governed by external bodies.
The tribunal's findings demonstrate that, in these scenarios, each engagement must be assessed in the round, taking into account autonomy, obligations, and the source of control. For firms, this nuanced approach reduces the risk of overly cautious blanket determinations that classify all workers as employees.
A reminder: the real test happens at stage three
The ruling reinforces a crucial principle from the Ready Mixed Concrete test, the case which sets the 3-staged framework for assessing employment status.
The first two stages, personal service and a sufficient framework of control, are low thresholds, and many engagements will always meet them. The proper analysis occurs at stage three, where all factors must be considered together, including the nature and extent of mutuality, degree of control, financial risk, integration, and the broader context of the relationship.
There are no shortcuts; a full multi-factorial assessment is essential.
What should hiring firms do next?
This decision should prompt a review of how employment status is assessed across your organisation.
Key actions include:
- Reviewing how sole traders are assessed, not just limited company contractors
- Ensuring status determinations consider the full picture, not just control or substitution
- Identifying where regulatory frameworks may be incorrectly treated as employer control
- Assessing whether shift-based or casual engagements genuinely lack mutual obligations
For many businesses, the biggest risk is reliance on outdated assumptions. Notably, the decision engine in HMRC's status tool (CEST) has not been updated since November 2019, despite the Supreme Court's legal clarifications that contradicted HMRC's "view" on status matters. CEST is misaligned with current case law and, with no indication of it being updated, firms still relying on it should treat it with caution.
If your business hires contractors or sole traders, and you want to understand more about what these changes might mean, book a free consultation with an expert.
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