HMRC won’t be getting a penalty against Middlesbrough FC
14 May 2019
14 May 2019
The long-awaited case transcript of Middlesbrough Football & Athletic Company (1986) Limited v HMRC (“MFC”) has been published and makes for a very interesting read.
None of the employees were contractually obliged to purchase season tickets and did so on behalf of family members. MFC agreed to the employees request that the cost of the ticket be deducted from their wages over a number of weeks and an agreement was drawn up.
Aspire Comment
The National Minimum Wage Regulations 2015 (“the Regulations”), in particular Regulation 12, sets out whether or not a deduction is permitted. According to HMRC, the deductions brought the employees pay below the correct level of National Minimum Wage (“NMW”) in force at the time.
Judge Pitt’s decision in favour of MFC, stated that;
"...the deductions as respect the purchase of the season card…are not to be treated as a reduction.
The workers were not required to purchase the season cards in connection with their employment…”
Whilst this will potentially be a welcome decision for employers who operate similar arrangements, it is important to remember that this decision is not legally binding on any other Tribunal and was made in regard to very specific circumstances where the purchase was made on behalf of relatives of the employee rather than the employee themselves.
The Judge also adopted a ‘purposive approach’ in interpreting Regulation 12(2)(e) and the outcome of the case relies on the Judge’s own interpretation that the arrangements could be considered “payments” rather than “deductions”. It is highly possible that another Judge may reach a different conclusion should HMRC appeal the decision.
We do not consider that MFC’s success will prevent HMRC from challenging arrangements in the future in what remains an extremely complex area of legislation.