What price MOO now?

Will HMRC have to take more notice of Mutuality of Obligation (MOO) given contractor layoffs.

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An SME company I work with has, until last week, used a mix of (PSC) and self-employed freelance contractors to support its own staff and was in the process of reviewing its arrangements under the requirements of the now deferred off-payroll rules. I am not a tax specialist but have followed the debates about IR35 on this forum closely and I had gathered that, of the three key tests of status, HMRC preferred to downplay the importance of MOO. I assume they have been able to take this view because  unless it could be demonstrated with examples of it working in practice, it is difficult for the taxpayer to prove. But now it can be. In my example due to the impact of  Covid-19 the company closed its doors last week (temporarily we hope) and all the consultants ceased. I would be very interested in the view of some of the specialist contributors to AW as to what impact they think this may have on the status debate. If  this company restarts again in a few months (like many others) and takes on contractors  again surely HMRC will find it hard to argue that MOO is not (or less) important as a test of status when, as has happened in this case and probably replicated across the country, the contractors have gone with none of the employment protections now in place for payroll staff and with no claims gainst the company. Many thanks

Replies (4)

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By Duggimon
30th Mar 2020 15:14

The off-payroll (IR35) rules for your client have not changed, were not going to change in April this year and will not be changing in April 2021 as they are an SME.

The status determination remains the responsibility of the limited companies to whom they contract.

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the sea otter
By memyself-eye
30th Mar 2020 18:07

You have a point.
IR35 now seems a pointless distraction from the Tsunami of 80% wage claims and insolvencies heading down the tracks. My experience (one case) is that every IR35 case take years to resolve (3+) and takes enormous HMRC resources.

Equally, MTD now looks like a stupid idea (it always was)

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By Matrix
30th Mar 2020 18:16

I think IR35 is dead because engagers now have no obligation to pay contractors so they are not, in fact, treated the same way as employees.

However I blame the contractor community for the increase in the rate of dividends and the perception of businesses run through limited companies. They have tainted the treatment for all genuine businesses who now have no help from the government.

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By ms998
31st Mar 2020 10:23

If you are a contractor and continue to work during this period it probably makes your situation worse.

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