Stance on Mutuality of Obligation remains unchanged

29 April 2021

Peter Aldous MP submitted a question for the Chancellor of the Exchequer, which queried whether or not HMRC had changed its stance on updating the Check Employment Status for Tax (CEST) tool to include consideration of Mutuality of Obligation (MOO).

Financial Secretary to the Treasury, Jesse Norman, responded:

“‘Mutuality of obligation’ (MoO) is a term often used to describe the basic obligations that exist between a hirer and a worker. These basic obligations are where the hirer is obliged to pay remuneration, of any kind, and the worker is obliged to provide their work or skill in return.

MoO is important because without it there can be no contract for the supply of a worker. CEST does account for MoO on these terms and is clear in guidance to users that it can only be used to determine employment status for tax where there is such a contract in place. CEST then considers this contract, testing the employment status factors, and determines whether the engagement is more likely to be employed or self-employed for Income Tax and National Insurance contributions purposes.

After receiving feedback during user testing, HMRC provided a link to guidance on MoO on CEST’s landing page to make this understanding clearer to users of the tool. The guidance can be found on GOV.UK: in a new tab).”

CIPP comment

The CIPP sits on the off-payroll working reforms forum and we would love to hear your views – do you think that MOO should be included in the CEST tool? Do you have any more general feedback that you would like to provide on your experiences of using the tool? Email the Policy team at [email protected]. Thank you in advance.


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