Empowering the Freelance Economy

IR35 and ‘Indecisive’: HMRC CEST tool leaves freelancers and contractors in limbo

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HMRC’s IR35 tool, Check Employment Status for Tax (CEST), has been monitored and the results have shown that the online tool has been unable to deliver a verdict for enquiring contractors and freelancers over 188,000 times in the past year. 

The data shows that between November 2019 and November 2020, CEST was used 975,416 times, delivering the following results:

  • 52% of cases determined outside IR35 (505,598)
  • 29% inside IR35 (281,099)
  • 19% undetermined, with CEST unable to deliver an answer (188,719)

When CEST cannot provide an answer, users are told to check the information they have inputted, referred to the Employment Status Manual and given a HMRC phone number and email address they can contact.

Qdos CEO, Seb Maley, commented on the figures, “These figures are damning. It’s worrying enough that CEST has been used nearly 1m times in the past year, but that it hasn’t been able to make up its mind a staggering 188,000 times is frightening. To make matters worse, people are then expected to work it out themselves by checking the complex employment status manual or get in touch with HMRC, whose own tool couldn’t help them in the first place. It’s staggering that CEST allows so many contractors and businesses to be left in limbo. These are decisions that carry with them tens, sometimes even hundreds of thousands of pounds in tax liability. 

The latest data from the latest version of CEST is not reassuring to contractors and freelancers as they approach IR35 reform come April 2021.

“Aside from being indecisive, the tool isn’t aligned with IR35 case law and has even been dismissed in court,” said Maley. “Fortunately, CEST isn’t mandatory, which is why I urge businesses to consider alternative ways to assess status that will provide a well-informed answer 100% of the time.”

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