0370 270 6000

already registered?

Please sign in with your existing account details.

need to register?

Register to access exclusive content, sign up to receive our updates and personalise your experience on brownejacobson.com.

Privacy statement - Terms and conditions

Forgotten your password?

Lack of Mutuality allows contractor to get around HMRC

23 February 2011

The rights of an employer to terminate a contract without notice could be key in deciding whether an independent contractor, trading through a limited company, has to comply with tax avoidance measure IR35.

In MBF Design Services Limited v HMRC the tax tribunal decided that the employer’s right to terminate Mr Fitzpatrick’s contract without notice was “characteristic of a contract for services but quite foreign to the world of employment”. Against this background, other terms of the contract which could be seen as confirming his employee status were given less weight.

This will give some comfort to contractors working on large manufacturing, IT or construction projects where contractors are required to use certain systems and procedures alongside employees, but have no true guarantee of work from week to week.

For employers seeking maximum flexibility from their independent contractors it does give an additional argument “after all…”, they can now explain to would-be contractors working for them “this clause helps you retain your independence ….”

Related opinions

Compulsory vaccinations in care homes

Care homes will need to take steps to assess the impact of these Regulations on their workforce.

View blog

Evidence of guilt not always required for fair dismissal

This case offers particularly helpful guidance for employers when being faced with employees who are suspected of criminal wrongdoing, albeit care should always be given to ensure allegations are clearly defined and considered on their own merits.

View blog

Flexible working, childcare and indirect sex discrimination – important reminder

The courts have long recognised that, on a societal level, women bear a greater burden of childcare responsibilities than men which can make it more difficult for women to comply with employer requirements for flexible working (known as the ‘childcare disparity’).

View blog

The frontier worker permit

All EU citizens who were not residing in the UK by the end of December 2020 and want to live and work in the UK from 1 January 2021 must apply for a visa as a result of Brexit.

View blog

Richard Nicholas

Richard Nicholas

Partner and Responsible for In House Lawyers

View profile

Mailing list sign up

Select which mailings you would like to receive from us.

Sign up