Not only does HMRC’s Check Employment Status for Tax (CEST) tool ignore important employment status criteria, it is not keeping pace with applicable case law either!
In a worrying development, HMRC have confirmed that they have not updated the IT logic behind their Check Employment Status for Tax (CEST) tool in the last five years. A Freedom of Information (FOI) request to HMRC by IR35 compliance firm IR35 Shield confirmed the public internet locations of the source code, and pointed to the most recent set of decision logic upon which the live tool is based. The online repository indicates the files have not been updated for 5 years.
The revelation means that CEST is out of date in relation to the twenty most recent IR35 tax tribunal decisions, despite a promise made by HMRC’s CEO Jim Harra to the contrary. On 4th March 2019, Harra told the Public Accounts Committee:
“We continually update the tool as new tribunal and court decisions are made about employment status, as well as continually increasing its scope so that it can respond to more and more types of cases… It is an ongoing, unending process.”
So this is yet another broken promise from HMRC, which demonstrates their arrogant disregard for taxpayers and contractors in particular.
Commenting on the latest CEST revelations, Dave Chaplin, CEO of IR35 Shield said:
“The stagnation of CEST means that businesses using it to determine the IR35 status of contractors are making decisions based on outdated logic that no longer reflects the current legal landscape.
“CEST has remained frozen since 2019, despite the landmark Atholl House Court of Appeal decision that dismantled HMRC’s approach to IR35 status determinations. Continuing to use methods based on the now-obsolete HMRC Policy View of status case law could lead to significant tax liabilities and penalties.”
