Mutuality of Obligation After the PGMOL Ruling

Mutuality of obligation after the PGMOL ruling

Mutuality of obligation (often shortened to MOO) is one of the three pillars of employment-status analysis, alongside control and substitution. For years it has also been one of the most misunderstood. Contractors are frequently told that "no mutuality of obligation" is an easy route to a client's IR35 status determination showing the engagement sits outside IR35. The Supreme Court's decision in HMRC v Professional Game Match Officials Ltd (PGMOL), and HMRC's updated manuals that followed it, make clear this is an oversimplification.

This article explains what mutuality of obligation actually means, how PGMOL has shaped HMRC's current published guidance, and why it is still only one part of a wider picture that includes control and the right of substitution.

What mutuality of obligation actually means

HMRC's Employment Status Manual describes an "irreducible minimum of mutual obligation" as necessary for a contract of service to exist. In practice, this basic minimum is narrower than many contractors assume: the engager must pay remuneration, and the worker must provide their own work or skill in return. That is the floor requirement for a contract to be in existence at all, before status is even considered (ESM0543).

This is a distinct question from whether an ongoing obligation exists to offer future work and accept it. Historically, some contractors and advisers treated the absence of that ongoing obligation, no guarantee of future assignments, no obligation to accept the next one, as sufficient on its own to rule out mutuality of obligation altogether. HMRC's guidance no longer supports that shortcut.

What PGMOL changed

PGMOL concerned part-time football referees engaged by the Professional Game Match Officials Ltd on an assignment-by-assignment basis, with no obligation on either side regarding future matches. The case worked its way to the Supreme Court, and HMRC's manual now reflects the outcome: mutuality of obligation can arise at the level of a specific, individual engagement, rather than requiring an overarching obligation to offer or accept future work across a series of engagements (ESM0543).

In other words, once a referee accepted a specific match appointment, mutuality existed for that engagement: PGMOL was obliged to pay for the match officiated, and the referee was obliged to do the work. The fact that there was no obligation to offer or accept the next match did not prevent mutuality of obligation existing within that single engagement.

For contractors, the practical read-across is that pointing to a lack of an overarching obligation between contracts or assignments is not, by itself, enough to say mutuality of obligation is absent. HMRC's manuals continue to distinguish between:

• mutuality needed for a contract to exist in the first place (payment for personally performed work), and
• mutuality relevant to the wider employment-status analysis, considered alongside control and other facts of the engagement.

Both ESM0543 and ESM8550 make this distinction after PGMOL, and it is echoed in HMRC's separate guidance on agency and temporary workers, which looks at whether mutuality exists during gaps between assignments under an overarching contract (ESM2330).

The hypothetical contract, for IR35 purposes

For off-payroll working and IR35 purposes, HMRC's manual states that mutuality of obligation is considered within the hypothetical contract between the worker and the end client, the contract that would exist if the intermediary were taken out of the arrangement. The relevant minimum here is the same as elsewhere: an obligation to pay for work done, and an obligation on the worker to do that work (ESM8550).

HMRC's own published paper on mutuality of obligation is worth noting for anyone who relies heavily on CEST (Check Employment Status for Tax): CEST does not explicitly examine mutuality of obligation, and assumes the user has already established that a contract exists before starting the tool (HMRC paper on Mutuality of Obligation). This is a reminder that, as HMRC itself accepts, CEST results are not determinative of status; they are one input, not a final answer.

Why this matters when reading a listing or an SDS

Where a listing or a Status Determination Statement states that a role sits outside IR35, that is the client's assessment, made on the basis of the actual working practices, contractual terms, and (where used) tools like CEST. Because mutuality of obligation now needs to be considered within the specific engagement rather than dismissed on the basis of "no ongoing obligation between contracts", it is generally considered alongside control and substitution rather than treated as a standalone knockout factor.

Contractors reviewing a contract or a client's SDS may find it useful to look at how the paperwork addresses substitution rights and the degree of control exercised over how, when, and where work is done, since these interact closely with mutuality in HMRC's current framework. A qualified IR35 contract reviewer or contractor accountant can assess how these factors combine in a specific case; general guidance on the principles can be found via HMRC's manuals linked above.

If you're weighing up contract terms on live roles, you can browse outside-IR35 contracts or check day-rate benchmarks for context on current market rates across sectors.

Where to go for further help

Employment status for tax (IR35) is separate from employment rights. Questions about employment rights, including agency worker status and enforcement, fall to the Fair Work Agency rather than HMRC. For IR35-specific questions on a particular engagement, a specialist contract reviewer is best placed to assess mutuality of obligation, control, and substitution together against the actual working practices.

This platform does not determine, verify, or warrant IR35 status; the SDS is the client's legal responsibility. Contractors should take their own advice and consider IR35 insurance.