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One of the key factors used to determine if a contract is subject to the IR35 rules is whether or not continuous work is offered by a client, and accepted by a contractor.
A service company will typically expect to sign a contract to provide a fixed amount of work, invoice the client, and get paid for the work. They would not expect further work to be offered at the end of the contract.
If however, the client continually offers work to the contractor, and this is accepted, this is a strong indicator of 'employment', and HMRC may take the view that the contractor's working practices are more akin to those of an 'employee'.
Essentially, if there is an obligation to offer further work, and an obligation to accept such an offer, then there is a mutuality of obligation (MOO) between the parties to an agreement.
In the eyes of HMRC, a 'rolling' contract, or contracts which are continually renewed, could be seen as indicators of 'employee' status.
Mutuality of obligation is one of several key IR35 factors used to determine employment status.
Contractors should remember that it is the overall picture of your contract and working practices which will determine whether or not you will be caught by IR35, and you may want to seek professional advice before signing a contract.
You can read HMRC's interpretation of 'MOO' in ESM0543.
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