An employer will try to make sure that his employees have a continuous supply of work and will also expect the employees to carry out the work when he requires. A self employed person will do the work he is being contracted to do and will finish with no expectation of further work.
When work is regularly given and accepted over a period of time, HMRC may take the view that employee status has been created by custom and habit.
Although mutuality of obligation is a key determining factor surrounding IR35, it is worth noting that HMRC’s lack of understanding and misinterpretation makes it difficult to mount a successful defence on this test alone. Additionally Judge Howard Nowlan in the 2011 UKFTT case of JLJ Services Ltd v HMRC stated, “There is considerable case law in relation to this test, progressively indicating that the test is of diminished importance, or that it is indeed meaningless....................A touchstone of being an employee is the hope and expectation that there will be some relationship of faithfulness between employer and employee. In other words, the employer will generally endeavour to keep staff employed when work is short.”
Currently, much focus is being placed on non-mutuality of obligations during the contractual term and, as such, it is important that a contractor has the right to walk away from a contract early, if they so choose. Also see Right of Dismissal.
If no clear end date is included in the agreement, and there is no explicit non-mutuality of obligations clause, the contract could fail an assessment, however it would be necessary to look at the other positive elements of the contract. If there is no end date, it may be appropriate for certain contracts to terminate upon the completion of the services – this would be acceptable in cases where the contract is based on clear deliverables.