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⚽ How football refs dodged a £584,000 tax bill (and what it means for M&A)
Idin Sabahipour
May 13, 2026
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If you take just one thing from this email...
Last week, a UK tax tribunal ruled that 60 part-time English Football League referees aren't employees of PGMOL, the body that supplies football refs. The interesting thing is that PGMOL's Premier League refs come through the very same body, and they are treated as employees.
The difference came down to the facts of the engagement. The lower-league refs all had day jobs, didn't rely on the refereeing income, and weren't really woven into the organisation.
Whether someone is an employee or a contractor isn't decided by job title or sector – it's decided by what the relationship actually looks like in practice.
EDITOR’S RAMBLE 🗣
It's exam season for many of you, so I'll keep it short.
If you've got an exam tomorrow, don’t read this email (you can come back to it at the weekend). Your grades matter more than almost anything else you'll do this year.
The first screening in most law firm applications is academics – a lot of people get knocked out then. It doesn't matter how strong your commercial awareness is if you don't make it past that filter.
Even if you're a first year, and TC applications feel a long way off, those marks still count.
You can always do another cycle of applications next year. You can't go back and resit a paper because you spent the night before reading LittleLaw.
– Idin
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FEATURED REPORT 📰
⚽ How football refs dodged a £584,000 tax bill (and what it means for M&A)
What’s going on here?
Last week, a UK tax tribunal ruled that 60 English Football League (EFL) referees were “self-employed” for tax purposes.
The decision throws out a £584,000 tax bill that HMRC (the UK tax authority) had sent to Professional Game Match Officials Ltd (PGMOL) – the body that supplies referees to English football. HMRC said PGMOL owed unpaid income tax and National Insurance Contributions (NICs).
🤔 Why did this bill arise?
When a company pays an employee, three tax bills get triggered:
Income tax: deducted from the employee's pay.
Employee NICs: also deducted from the employee's pay.
Employer NICs: paid by the company on top of the wage.
The NICs payments fund the state pension and certain benefits.
If the worker is self-employed (sometimes called a “contractor” or “freelancer”) they don’t receive their payment automatically from the companies they work for.
Instead, they:
→ Give their client an invoice.
→ Their client pays that invoice.
→ The self-employed person handles their own tax bills directly.
PGMOL treated its part-time referees as self-employed contractors. HMRC disagreed, said they were employees, and claimed unpaid income tax and NICs.
Why did both PGMOL (and the referees) want to be considered self-employed?
Both sides save tax when a worker is treated as self-employed rather than employed.
🏢 The company avoids employer NICs entirely. Employer NICs are paid on top of the employee's wage – so a £50,000 salary really costs the company closer to £57,000. Self-employed contractors don't trigger employer NICs at all.
💷 The worker pays a lower personal NIC rate. Self-employed NICs sit at a lower rate than employee NICs – 6% on profits, compared to 8% on wages.
🧾 Expenses come out before tax. Self-employed people deduct business costs – travel, equipment, subscriptions – before income tax is calculated. Lower income on paper means a smaller tax bill.
Every pound the company and worker save is a pound HMRC doesn't collect – which is why HMRC polices the line between "self-employed" and "employee". When HMRC and a company can't agree on which side a worker falls on, the courts apply the legal test.
How does the law decide who's an employee?
The test was set out in Ready Mixed Concrete (1968). The first step is a gateway stage. The court asks three basic questions before moving on.
⚖️ Personal service. Does the worker have to do the work themselves, or can they send someone else? If they can send someone else, it looks less like an employee relationship.
🤝 Mutuality of obligation. Is there a reciprocal duty – work in exchange for pay – at the point the work is being done? If the company doesn't have to give them work, and they don't have to take it, that's not employment.
📑 Control. Does the company have enough say over how the work gets done? The more the company tells them what to do, the more it looks like employment.
The test then weighs six further factors as a whole.
Factor | What the tribunal is asking |
|---|---|
💸 Financial risk | Does the worker stand to lose money if things go wrong, or is their pay guaranteed? If they can lose money on a poor job, that points to self-employment. |
🧍 Dependence | Does the worker rely on this one company for their income, or do they have a portfolio of clients? Working for many companies points to self-employment. |
⏱️ Time commitment | How much of the worker's working life is tied up with this company? The more of their time goes to one company, the more it looks like employment. |
🛠️ Who provides the equipment | Does the worker bring their own tools, or does the company supply them? Bringing one’s own tools points to self-employment. |
📅 Length of the engagement | Is it a one-off project or a long-running, indefinite arrangement? A longer, indefinite arrangement points to employment. |
🏢 Level of integration | Is the worker woven into the organisation – on the organisation chart, in the team meetings – or genuinely external to it? The more integrated they are, the more it looks like employment. |
These are the questions the FTT asked when looking at the relationship between the part-time referees and PGMOL.
So why aren't the referees employees?
The First-tier Tribunal (FTT) – the court that handles tax disputes – applied the test to the 60 National Group referees (refs who officiate EFL League One and below) and found that this wasn't employment.
Three factors stood out.
📜 Most of PGMOL's rules came from the Football Association (FA). In practice, the FA sets out Match Day Procedures, fitness tests, coaching and assessment. PGMOL's rules simply repeated them. So PGMOL wasn't really controlling the referees – the FA was.
🗂️ The referees' badges came from the FA, not PGMOL. The FA gives referees their professional identity and accreditation. They sit inside the FA's framework, not PGMOL's organisation. They were FA referees who happened to work through PGMOL – not PGMOL employees.
🎯 The referees all had day jobs. National Group refereeing was, in the FTT's words, “a hobby, albeit a very serious one”. That means the referees weren't financially dependent on PGMOL – and dependence is a hallmark of employment.
🤔 Why do Premier League officials produce a different answer?
PGMOL accepted that its Select Group referees (the ones officiating Premier League and Championship matches) are employees. They work full-time, attend all meetings and training, and are effectively unavailable for anything else.
The National Group referees who officiate from League One downward aren't subject to that level of obligation.
The same organisation and legal test produced opposite outcomes – because their status is based on the facts of how they actually work.
Why should commercial lawyers care?
The same employee vs self-employed test runs through two areas of commercial practice – advisory tax work and M&A transactions.
🏢 Tax and employment lawyers address this question a lot. Tax and employment lawyers are often instructed by companies to apply this test in borderline cases.
Take a tech company that pays 200 “consultants”, who each invoice the company personally for years. If HMRC decides those consultants are really employees, the company is on the hook for years of unpaid NICs, and income tax – plus interest and penalties. Before that happens, the company's employment lawyers will run the Ready Mixed Concrete test across the workforce and reclassify anyone who looks too much like an employee.
🧾 The same test can affect the price of an M&A deal. When a buyer acquires a target company with a large contractor base, the risk that those contractors are really employees passes with the company – along with unpaid tax bills, interest and penalties.
Imagine a delivery startup with 500 “self-employed” couriers. Each courier wears the company's uniform, uses its app to accept jobs, can't substitute another courier, and works set shifts. On paper they're contractors. In practice – by the Ready Mixed Concrete test – they look a lot like employees.
That's why running due diligence on employment status can be a big job on M&A deals. If lawyers spot a contract that calls someone an independent consultant but looks like employment in practice, the buyer and seller negotiate who picks up the bill.
More importantly, reclassifying these relationships can change the price of a company, because it directly affects the EBITDA of the target company.
🤔 What's EBITDA?
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) is a measure of a company's underlying profit. In an acquisition, buyers usually price companies by multiplying EBITDA by a number that reflects how attractive the business is.
Employing workers as "employees" costs more than paying them as "self-employed" – employer NICs, pension contributions, holiday pay and sick pay all add up. If the target's "contractors" should really have been employees, those costs were missing from the books. Once that gets corrected, the true staff cost is higher than the target reported, and the EBITDA drops – and a lower EBITDA usually means a lower price.
Which law firms were involved?
PGMOL was represented by McCormicks Solicitors, instructing Jonathan Peacock KC (11 New Square) and Georgia Hicks (Devereux Chambers).
HMRC was represented by its in-house legal team, instructing Akash Nawbatt KC and Sebastian Purnell (both also of Devereux Chambers).
🤔 How can barristers of the same chambers appear for both sides?
The SRA's Code of Conduct says solicitors can't act for two clients whose interests conflict – live litigation, like this, is a clear example. The rule binds both the individual solicitor (Rule 6.2 for Solicitors) and the firm itself as a separately regulated entity (Rule 6.2 for Firms) – so one firm can't put two of its solicitors on opposite sides of the same case.
Barristers’ chambers are different. Each barrister is self-employed and individually regulated by the Bar Standards Board, but the chambers itself is not regulated. So two barristers from the same set can appear on opposite sides of a case.
How can you use this in your applications?
Here are some ways you can use the insights from this story in your law firm applications.
Insight | Why it’s important | How to use it in your applications |
|---|---|---|
The cheaper option today can become a tax bill tomorrow | Companies save serious money when a worker is self-employed – no employer NICs, no pension contributions, no holiday pay, no sick pay. But HMRC can audit years later, and the bill comes with interest and penalties: PGMOL were about to be hit with a £584,000 bill before winning at the tribunal. | You can talk about this if you’re interested in tax law. A tax lawyer understands that companies want to minimise tax – but their job is to make sure the savings clients chase today don't turn into a bigger bill tomorrow. |
Misclassification can change the price of an M&A deal | If a target's “contractors” should really have been employees, its labour cost was understated and its EBITDA was overstated. Buyers price companies by multiplying EBITDA by a number, so the headline price was built on the wrong number. | In an M&A case study reviewing a target company with a large number of workers, flag employment status as a risk that could affect the price. Depending on what you find during the due diligence process, you could advise the buyer to negotiate a price reduction. |
IN OTHER NEWS 🗞
⚖️ Meta has launched a High Court judicial review against Ofcom over how the Online Safety Act fines are calculated. The regulator can fine companies up to 10% of their qualifying worldwide revenue – which, for Meta's $201 billion last year, puts the theoretical ceiling near $20 billion. Meta says only revenue from UK-regulated services should count.
💼 Norton Rose Fulbright has raised its newly-qualified solicitor salary to £140,000. The £5,000 jump, effective from 1 April, puts the firm level with Macfarlanes, Hogan Lovells and Ashurst – but still behind HSF Kramer and Baker McKenzie on £145,000, and the Magic Circle's £150,000. Trainee pay isn't moving, though (£56,000 in the first year and £61,000 in the second).
🛒 Sainsbury’s, Morrisons and Iceland want Aldi and Lidl held to the same rules they follow. The grocery giants have asked the Competition and Markets Authority to reclassify the German discounters as “large grocery retailers” under a 2010 order. That would stop them being able to block rivals from opening nearby stores – something the other big chains have been barred from doing for 15 years.
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