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Questions have been begun to be raised on the off-payroll compliance regulations with the HMRC and HMRC’s implementation of MOO (mutuality of obligation). This development comes at a time when a split decision for the latest IR35 tribunal case has made matters interesting.

For the George Mantides Ltd (GML) v HMRC case, Judge Charles Hellier gave two different outcomes against engagements of the urologist George Mantides’ limited company. One of the engagements was ruled outside the IR35 while the other was ruled inside the IR35.

Regarding the engagement between the Royal Berkshire Hospital (RBH) and GML in 2013, the judge agreed that IR35 was applicable to it. However, the appellant was able to successfully challenge a tax bill that revolved around an engagement later in that year with MMH (Medway Maritime Hospital).

This outcome has served as positive news for the NHS locums who are affected due to the off-payroll reforms. After several instances in which blanket decisions were widely applied within the NHS because of these rules, this recent result has reinforced the view that despite the instructions of HMRC, it is wrong of trusts to go against the locums and consider them to be falling into the IR35.

Meanwhile, HMRC will be happier because, after four tribunal defeats with IR35, they finally have a partial victory in the bag. The importance of MOO to differentiate these decisions have opened up discussions on how does the taxman interpret the employment test, along with questions over its decision to remove MOO completely from the processing of CEST (Check Employment Status for Tax) too.

Martyn Valentine, a legal expert from the Law Place Limited, believes that these outcomes have emphasised upon the significance of MOO to determine employment status. He added”

“In the engagement with MMH, the hospital was neither obliged to provide work nor provide notice of termination in excess of an “illusory” one day. As per Ready Mixed Concrete MOO does not exist where there is no obligation upon the individual to provide their own work, therefore, emphasising the importance of substitution”.

Despite both of the engagements having striking similarities, the Judge pointed towards three differences in which Mantides’ employment for both the RBH and MMH was different. For example, without a formal contract, Mantides was needed to offer his personal services to the RBH. On the other hand, in the contract between the MMH and GML, there was a valid and definite substitution clause that allowed for any suitable substitute.

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