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Posted 14th October 2019

Controversy over HMRC’s stance on MOO

What is Mutuality of Obligation? (MOO)

Mutuality of Obligation (MOO) is an employment law concept which describes the obligation between an employer and employee.  MOO exists when employers are obliged to provide work and employees are obliged to accept the work provided.

It is used as one of three tests to determine IR35 employment status. The other tests being substitution and control.


The controversy arises because the CEST (Check Employment Status for Tax) tool created by HMRC does not currently consider MOO as part of its assessment. Many in the industry including contractors, recruiters, accountants, and legal professionals have all questioned this approach. Since IR35 was introduced back in 2000 MOO has been a key factor in IR35 case law.

Previously HMRC have argued that the absence of MOO in the CEST tool is because mutuality of obligation must already have been established for a contract to exist. However, a new version of the tool is currently being worked on and in the most recent set of minutes published by HMRC from the IR35 Forum they state that they will “work with members and stakeholders to consider how mutuality of obligation can be included in CEST.”

The CEST tool has been widely criticised as not fit for purpose.  Concerns about its accuracy have intensified since the announcement that IR35 reforms will be introduced for contractors in the private sector from April 2020. With this deadline fast approaching the industry is waiting for reassurance that MOO will be included in the tool and that case law will be considered.  The new CEST tool is expected to be available before the end of the year but as yet there has been no confirmation of the specific date it will be released.

At Exchequer Solutions, as always, we will be monitoring the situation and keeping our employees, contractors and recruitment agencies informed via our news page and social media. Please follow us on Twitter or LinkedIn for updates on the IR35 and the CEST tool. If you are a contractor and are concerned about how the changes might affect you then please get in touch. We will be happy to discuss IR35 and your contract/future contracts with you.

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