HMRC introduced the CEST (Check Employment Status for Tax) tool in March 2017 and it has been much maligned ever since. Even with the occasional update, CEST still doesn’t follow case law or precedent that has been set since IR35 came into force in 2000.
Some of the main issues with businesses using CEST:
- CEST doesn’t consider MOO (Mutuality of Obligation) which is one of the 3 key tests for IR35
- It is an automated tool that doesn’t give advice and can only assess what information is input
- Inputting incorrect information or the person using it not understanding IR35 doesn’t constitute Reasonable Care in the legislation
- Multiple public sector bodies have used CEST since 2017 and there is now evidence of them receiving multi-million-pound fines – HMRC doesn’t seem to stand by the outcome provided by CEST
- According to HMRC data, 21% of CEST reviews are left ‘undetermined’ which leaves businesses with no resolution and needing further advice
HMRC have provided the CEST tool as a resource to utilize, but don’t stand by the results. With no dedicated training, knowledge of the process and lack of understanding of IR35, we have seen many businesses get incorrect results and many public sector organizations receive fines!
The use of an online tool may be the ‘cheap’ and ‘easy’ option, but it is fraught with danger. It leaves you with little or no protection from an IR35 investigation conducted by HMRC and provides no advice or guidance of professional indemnity insurance to rely upon! As the old saying goes – ‘Pay peanuts, get monkeys!’
For any business that is concerned with what they have read so far get in touch, as we would be happy to offer our expertise along with
a selection of free IR35 reviews to test your process.
