With the draft finance bill revealing private sector changes, tax advisers are warning that unless there are significant improvements to HMRC’s Check Employment Status for Tax (CEST) tool, the ‘new rules will lead to uncertainty and protracted disputes’.
The Charted Institute of Taxation (CIOT) has repeatedly raised concerns that CEST does not factor in all the necessary criteria (established in case law) that need to be considered in arriving at its decision as to whether or not IR35 applies; a view borne out by the cases that have been argued in the courts over the years, numbers of which have gone against HMRC.
There’s also the fact that CEST does not always give an accurate employment status determination. This does not instil confidence in those relying on CEST to help with status decisions, warns the CIOT.
Colin Ben-Nathan, Chair of CIOT’s Employment Taxes Sub-committee, commented, “If businesses are to make the correct decisions on whether the off-payroll rules apply then CEST will need to be significantly improved. While HMRC is looking to enhance CEST to ensure it works more effectively, and will be engaging with stakeholders to test these enhancements, it is only undertaking to roll out the new service before the new off-payroll working rules are introduced next April.