Mutuality of obligation (MOO) appears in almost every IR35 discussion, although people rarely mean the same thing when they refer to the term.
HMRC views MOO in one way, many status specialists frame it another, and the tribunals have spent years trying to clarify what it means.
For contractors, it usually comes up when a client insists a role is inside IR35 because “there’s enough MOO”, even though they may not be able to explain what that means in practice.
This guide explains how mutuality works within IR35, how HMRC interprets it in its guidance, and how recent cases have dealt with it.
It sits alongside our other core status guides, including IR35 employment status tests explained and the right of substitution.
What mutuality of obligation actually is
The basic idea is straightforward. One party agrees to provide work or payment, and the other agrees to perform work personally.
This is sometimes called the wage-work bargain.
That minimum level of obligation exists in almost any paid engagement. It is needed before there can be a contract of employment, but it does not prove that the contract is one of employment.
The remaining status tests still have to be considered.
This is where many IR35 discussions go wrong. The absence of any promise of another contract or further work after the engagement ends does not, by itself, defeat mutuality.
A person can be employed under a single short contract even if neither side is obliged to enter into another one.
How HMRC views MOO
HMRC has long held that, if a contract for work exists, the minimum mutual obligations will usually be present.
You can see this in the Employment Status Manual, including ESM0500, where HMRC explains its reasoning.
This also explains why the Check Employment Status for Tax (CEST) tool doesn’t include a separate section devoted to mutuality.
CEST assumes that the necessary obligations exist where the parties have entered into a contract under which work will be performed for payment.
Tax advisers have criticised this approach for years. However, recent decisions have moved the legal position closer to HMRC’s view of the minimum requirement.
What PGMOL established
The Supreme Court considered mutuality in HMRC v Professional Game Match Officials Ltd.
The referees were not guaranteed appointments and could turn down matches. PGMOL was not obliged to offer them work in the future.
However, once a referee accepted a match, both sides took on obligations. The referee agreed to officiate personally, and PGMOL agreed to pay for the work.
The Supreme Court held that these obligations were capable of satisfying the mutuality requirement during each individual engagement.
That did not mean the referees were automatically employees. It meant the remaining employment status tests still had to be considered.
No promise of future work is not an automatic route outside IR35.
How tribunals approach MOO
Following PGMOL, the main question is whether sufficient obligations exist during the contract being examined.
Relevant points may include:
- whether the worker is required to perform at least some work personally
- whether the client is required to provide work or payment
- whether the worker can refuse all work without breaching the contract
- whether the obligations continue throughout the contract
The absence of an overarching agreement between assignments may still be relevant when deciding whether employment exists between engagements, as the House of Lords considered in Carmichael v National Power.
For IR35, however, the hypothetical contract usually concerns the particular engagement under review.
The Upper Tribunal also considered mutuality in HMRC v RALC Consulting Ltd. It warned against treating termination rights, project work or the absence of future contracts as enough to remove mutuality.
What evidence is relevant?
Most disputes over mutuality begin with the terms of the written contracts.
If a client can require the contractor to take on unrelated work without agreeing new terms, this may point towards employment.
If the contractor is engaged to complete defined work and can refuse anything outside that scope, this may point towards an independent business relationship.
Useful points include:
- whether the work and deliverables are clearly defined
- whether the contractor must accept additional tasks
- whether changes to the scope must be agreed
- whether extensions are negotiated rather than assumed
- whether either side can cancel an accepted piece of work without breaching the contract
None of these points determines IR35 status on its own.
The written contracts remain central. Other evidence may help establish oral or implied terms, show that the agreement was varied or explain the circumstances in which the services were provided.
This does not mean that day-to-day working practices automatically override the contract. Read our guide to Atholl House for more on the modern approach.
Why MOO still confuses people
The same term is often used to describe two slightly different questions.
The first is whether sufficient obligations exist to create a contract at all.
The second is whether the obligations are of a kind which helps make that contract one of employment.
The courts have increasingly confined MOO to the first question. Once the minimum wage-work bargain is established, the tribunal moves on to control and the other terms of the contract.
This is why MOO should not be treated as a standalone test which decides the entire IR35 position.
What this means for IR35 determinations
Most status determinations lean heavily on control and substitution. Mutuality may receive less attention because the minimum requirement is often satisfied once a paid engagement has been agreed.
That does not make every contractor an employee.
A project-based contract, the ability to reject work outside its scope and the absence of any wider commitment may still be relevant when the contract is considered as a whole.
But a contractor should not rely solely on the argument that there is no guarantee of another project when the current one ends.
HMRC’s April 2025 refresh of CEST did not add a separate set of mutuality questions. Read our full guide to CEST and its limitations.
Key point to take away
Mutuality asks whether the parties have taken on the minimum obligations needed for a possible contract of employment.
In many IR35 engagements, that threshold will be met once the contractor agrees to perform work personally and the client agrees to provide work or payment.
It does not settle the final status decision.
You still need to consider control, substitution, financial risk and the other terms of the hypothetical contract before deciding whether the engagement falls inside or outside IR35.