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This UT IR35 decision looks a bit iffy

https://www.bailii.org/uk/cases/UKUT/TCC/2021/134.pdf

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https://www.bailii.org/uk/cases/UKUT/TCC/2021/134.pdf

If what they say re MOO is correct re immediately terminable contracts then it makes MOO a rather pointless, hollowed out concept, since when does anyone work for free without consideration (to create a contract in the first place) other than as a volunteer working for free when there will be no tax issues in the 1st place.?

Also, the fact he was skilled means substitution was possibly neutral per Mitchell and another v HMRC [2011] UKFTT 172 (TC), but they did not even consider that point.

Possibly the right decision, but not a terribly impressive judgment in my view. I note some criticism of the FTT  judgment here too:

https://www.accountingweb.co.uk/tax/business-tax/ir35-costs-project-mana...

 

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Stepurhan
By stepurhan
11th Jun 2021 15:45

MOO has always been an odd thing to include in the tests. As you say, it is pretty much a given in any contract.

Thanks for the brief notes. They have piqued my interest enough to look at this in more detail later.

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Psycho
By Wilson Philips
11th Jun 2021 16:27

Agreed. The Tribunal, in considering that MOO can be established simply as a consequence of payment being required in return for work done, seem to have strayed from the traditional meaning of the phrase (and used in previous decisions and commentary) - being an obligation on the one hand to provide work and an obligation on the other to undertake said work. It goes without saying that one would expect to be paid for work done unless undertaking as a volunteer. If this is indeed the approach that the courts and HMRC will adopt in future then it renders the concept of MOO, as a test, redundant.

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By Justin Bryant
11th Jun 2021 16:32

In fact, possibly I'm misreading it, but I think what they say re MOO is nonsense.

Suppose you have a 5-year or open ended contract and there is no obligation on the engager to provide any work. The contract is not immediately terminable by either party, but has a 3-month notice period. On the UT's reasoning, that's all irrelevant re MOO, just because some employment contracts happen to be immediately terminable.

I think their reasoning is faulty and it's only due to the services stated in the contracts (that the individual was required to perform) that meant the MOO test was arguably met in this case (hence it's possibly a correct decision).

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Replying to Justin Bryant:
Psycho
By Wilson Philips
11th Jun 2021 16:39

If you are misreading it, then so am I.

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Replying to Justin Bryant:
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By jonharris999
12th Jun 2021 12:29

I agree.

At para 95, I take their quote from PGMOL to indicate the reverse of what they say; PGMOL was clearly ruling that there must be something more to meet the MOO test than the-plumber-fixed-the-loo-so-I-paid-the-plumber; for obvious reasons (because otherwise MOO would be met in every contract for work).

In PGMOL it was precisely the conclusion that the employer would have to be offering something more in order to create MOO.

Hopefully Mr Lee has deep pockets and can stretch to the Court of Appeal.

Having said that, I also agree with @stepurhan that in practical day-to-day decisions it remains safer and easier to think about control, substitution, and issues such as whose-equipment and part-and-parcel -of-the-organisation than it is to think about MOO.

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