Tax Specialist Criticises CEST Mutuality of Obligation Response by HMRC

Tax Preparation Expert Declares HMRC MOO Stance Unworkable in Private Sector

One of the UK’s leading tax experts today criticised HMRC’s reasoned response to concerns surrounding their controversial CEST (Check Employment Status for Tax) tool with regards to MOO (Mutuality of Obligation) which has caused confusion among the UK’s public sector contractors.

David Redfern, founder of DSR Tax Claims, argued that the statement issued by HMRC last week, has not provided clarification for UK contractors working within the public sector and will prove to be unworkable if HMRC intends to roll out IR35 to contractors working within the private sector, as current consultations indicate.

The statement supporting HMRC’s decision to omit MOO (mutuality of obligation)from the CEST tool has proved controversial due to its assumption that there will always be a mutuality of obligation in any working arrangement between contractor and company, regardless of the nature of the terms of employment for the contractor. MOO centres on the assumption that an obligation exists for work to be provided in exchange for pay, however Redfern disagrees that this mutuality exists in all cases of contractor employment, stating that “HMRC has a limited view of the multiplicity of engagement that contractors can take within the employment sector, even when just looking at public sector contractors, as the range of recent tribunal cases has seen. As we as a society move away from conventional working patterns, traditional assumptions about contracting roles are no longer always valid – HMRC’s stubborn insistence that all contracts must contain mutuality of obligation is out of step with reality”.

With HMRC currently consulting on rolling out IR35 regulations to contractors working in the private sector until August 2018, Redfern added that should that roll-out occur the assumption inherent in HMRC’s CEST tool will be further tested, stating that “with the breadth and variety of working practises within the private sector, HMRC’s refusal to accept that not all working relationships will encompass this idea of mutuality will ensure that even more contractors will end up seeking clarification through the tribunal process, unless HMRC expand their awareness of how contactors work in today’s working environment”.


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