HMRC IR35 CEST Tool not fit for purpose

The HMRC have an online tool called CEST. It is meant to provide an assessment as to whether a contract falls in or outside of IR35.

Some Clients and Recruitment Agents will say that they make their assessment based on the HMRC CEST tool. If they do, then you need to convince them not to, or I advise you to walk away from the 'opportunity'. Just a side note: If you are a Contractor with your own Limited company then you should not be anywhere near a Recruitment Agent. You have no intention of being recruited and the end client should not be interested in recruiting you.

Below is a list of articles that should help you understand why you should not be assessed using the CEST tool.

Please remember, I have no legal standing. Ultimately everything rests with you, so make sure you consult with and IR35 Insurance provider.

Summary: CEST Off-Payroll Tool Had No Formal Accuracy Testing, Admits UK’s HMRC
https://globalpayrollassociation.com/blogs/latest-news/cest-off-payroll-tool-had-no-formal-accuracy-testing-admits-uk-s-hmrc

Summary: Does HMRC understand its own IR35 rules? TV stars take taxman to court and win
https://www.simplybusiness.co.uk/knowledge/articles/2019/05/celebrities-win-IR35-cases-against-HMRC/

Summary: HMRC’s Check Employment Status for Tax (CEST) is still not properly tested two years since its release, according to a Freedom for Information (FOI) request by UK contracting industry organisation
https://smallbusiness.co.uk/hmrc-employment-status-test-tool-not-working-properly-2546629/

Summary: The landmark case – funded and backed by IPSE – saw Susan successfully claim £4,200 after HMRC deemed her to be ‘inside IR35’, fundamentally changing her employment status to ‘worker’, but not ensuring her legitimate right to holiday pay.
https://www.ipse.co.uk/ir35-hub-ipse/ir35-defence/meet-the-woman-who-took-on-hmrc-and-won.html

Summary: HMRC have deemed their own CEST tool as ‘irrelevant’, report contractor news site ContractorCalculator.
https://www.qdoscontractor.com/news/2019/07/09/hmrc-disregard-cest-tool

Summary: HMRC: We 'rigorously tested' IR35 tax-check tool... but have almost nothing to show for it
https://www.theregister.co.uk/2019/02/08/ir35_tax_check_testing/

Summary: HMRC refuses to stand by “irrelevant” CEST in IR35 tribunal case
https://www.contractorcalculator.co.uk/hmrc_refuses_stand_irrelevant_cest_ir35_551410_news.aspx

Summary: CEST does not provide certainty or reasonable care, says ex-HMRC tax inspector
https://www.contractorcalculator.co.uk/cest_reasonable_care_ex_hmrc_tax_inspector_544010_news.aspx

Summary: NHS Digital hit with £4.3m tax bill after reliance on faulty CEST
https://www.contractorcalculator.co.uk/nhs_digital_hit_43m_tax_bill_cest_553910_news.aspx

Summary: HMRC loses £100k IR35 enquiry in another story of taxman’s shambolic approach to compliance.
https://www.linkedin.com/pulse/hmrc-loses-100k-ir35-enquiry-another-story-taxmans-shambolic-maley/

Hopefully you can now see that you should decline to be assessed by the CEST tool.

If you operate a genuine UK based Limited company supplying Software Services you might like to look at the following service that we provide.

https://www.uksoftwarejobs.co.uk/ServiceProvider