Improved CEST tool to assist with IR35 reforms announced

23 October 2019

Further to the announcement from Jesse Norman earlier this week that HMRC would be deploying extra resource to assist with the implementation of the IR35 reforms from April 2020, HMRC itself has confirmed this and also advised that there will be an updated check employer status for tax (CEST) tool available.

The CEST tool is an online resource that assists with determining if a worker is deemed as having employment status which, in turn, dictates tax and NI implications. In considering the new IR35 Off-payroll Working rules potentially coming to fruition in April 2020, HMRC has advised that there will be a newer version of the tool published prior to the end of this calendar year.

This will be welcome news to employers who are seemingly growing increasingly concerned about the new rules, as this should aid with the creation of Status Determination Statements (SDS). The SDS provides the outcome of whether a worker is classed as ‘inside IR35’ and must be presented to the worker and all affected parties within a labour chain as part of the upcoming reforms. One requirement of the SDS is that the decision needs to have been established by demonstrating that ‘reasonable care’  was taken to arrive at the decision, otherwise the engager could potentially be liable for the worker’s tax, in addition to having to pay the employer’s National Insurance and Apprenticeship Levy figures. Correctly using the CEST tool could be perceived as exercising ‘reasonable care’ so the validity and accessibility of the tool are crucial.

The tool was introduced in 2017 and consists of several multiple-choice questions which provide an end result as to whether somebody is classed as having employment status or not. HMRC accepts the outcome of the tool, providing that the answers provided to the questions are accurate and that the tool has been utilised correctly. It was tested against case law and has provided determination in 85% of uses, however, there are more complicated scenarios in which HMRC is providing further support and guidance to establish the outcome. HMRC liaised with more than 300 stakeholders to receive feedback on how the new tool should work, and the enhanced version is expected to be made available before the end of the year. In the interim, the current CEST tool will be available and the results will be accepted, so engagers should continue to use it in relation to Status Determination Statements.

CIPP comment

The CIPP’s policy team, along with several of our members, have been involved in the testing of the CEST tool and have provided feedback as to how it could be improved.  Although there are still some questions which cause us concern, there is no doubt that the new CEST tool is an improvement on the current version, but we are still hopeful that HMRC will take on board our additional comments which we believe will improve it even further.

 Employers should remember that use of the CEST tool is not mandatory in order to determine the status - it is simply one option open to them. 


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