Upper Tribunal Tax and Chancery Chamber

UT/2020/000377 - [2024] UKUT 00099 (TCC)

Fecha: 15-Dic-2023

The FTT’s approach to mutuality of obligation

The FTT’s approach to mutuality of obligation

74.

On the question of mutuality of obligation – the first limb of the RMC test – the FTT directs itself in the following terms at FTT [51]:

“51.
The fact that Mr Alcock was engaged under a series of contracts and at the end of each one there was no obligation to offer further work outside of those contracts is not a relevant consideration. The question is whether the hypothetical contracts, covering the periods under review, would have been contracts of service: HMRC v Larkstar Data Ltd [2009] STC 1161 at [32]. In any event, it is sufficient that there was mutuality of obligation during the term of each contract: Island Consultants Ltd v HMRC [2007] STC (SCD) 700 at [11].”

75.

The FTT therefore notes that the test of mutuality of obligation can be met by reference to the terms of each individual engagement.

76.

We have summarized the FTT’s approach to the question of mutuality of obligation as part of our summary for the purposes of Ground 1. As we have discussed, the FTT’s analysis was divided into two parts: (i) an analysis of the arrangements with each of Accenture and DWP separately; and (ii) an overall assessment of the presence of mutuality of obligation in the arrangements as a whole.

77.

In relation to the separate analysis of the Accenture and DWP arrangements, the FTT concludes at FTT [332] and FTT [348] that the contractual rights on mutuality of obligation point away from the hypothetical contract between Mr Alcock and the end clients being a contract of employment. The FTT reached that conclusion for various reasons including:

(1)

the lack of any legal obligation on the end client to provide a guaranteed minimum number of hours of work (see FTT [315], [318], [324], [327], and [331] in relation to the Accenture arrangements, and FTT [337], [333], [339], and [342] in relation to the DWP arrangements);

(2)

the lack of any legal obligation on Mr Alcock to accept work that was offered (see FTT [316] in relation to the Accenture arrangements, and FTT [333] in relation to the DWP arrangements);

(3)

the lack of any obligation on the end clients to provide further work at the end of the individual engagements (see FTT [317] in relation to the Accenture arrangements, FTT [334] and [336] in relation to the DWP arrangements); and

(4)

the fact that the contracts could be cancelled at any time (see FTT [319], [325], and [326] in relation to the Accenture arrangements, and FTT [340] in relation to the DWP arrangements).

78.

In relation to its overall assessment of the arrangements, the FTT reached the view that “while there was mutuality of obligation in the broad sense” (FTT [353]), it was not satisfied that “sufficient mutuality of obligation did exist” between Mr Alcock and the end clients to establish a contract of employment (FTT [355]). It did so for the following reasons:

(1)

there was no contractual obligation on the end clients to provide work (FTT [350]);

(2)

there was no contractual obligation on Mr Alcock to accept work (FTT [354]);

(3)

there was no contractual guarantee of a minimum number of hours’ work (FTT [351], [353]).