Concerns over CEST IR35 tool
The UK contracting community voiced huge concerns about the reliability of the HMRC CEST Tool, which was built to assist end engagers with the IR35 decision-making process – released in March 2017, just weeks before public sector IR35 reform was introduced.
Employers were again warned by Qdos Contractor, that using HMRC’s online IR35 assessment tool, CEST, is a serious risk because of its unreliability. They called private sector businesses to engage IR35 specialists to assess each individual contractor’s status on a case by case basis, so that their contracting talent receives proper, accurate IR35 determinations.
Even though the government continues claiming that CEST-delivered IR35 “victory” in last year’s public sector reform, and HMRC insists that the tool is capable of making accurate IR35 assessments in the public sector and is therefore serving its purpose which he described as “shambolic.”
Qdos Contractor’s Benedict Smith noted that there was frustration among the UK’s professional and the contracting community has expressed “huge concern” over the accuracy of the tool, yet the government remains “blinkered” about its quality.
In a question from The SNP’s Martyn Day, HMRC’s Mel Stride was rightly pressed on whether he will prioritise a review of CEST.
Stride’s reply made no mention of any of its obvious failings – which in many IR35 expert’s eyes includes an over-reliance on the right of substitution being present – he defended the controversial tool, stating:
“CEST service has been tested for accuracy against known case law and settled cases. It provides an answer for 85 per cent of uses, and HMRC will stand by the result given unless a compliance check finds the information provided isn’t accurate.”
And it is HMRC’s confidence in its own success that has led Mr Stride and his employers to place such trust in CEST – a controversial piece of technology which has worryingly been used hundreds of thousands of times since its arrival.
Smith said that contractors have heard this standard response before, and many will find it just as unsatisfactory as the previous statements made by Mel Stride and HMRC.
“After all, how long might a public sector contractor be made to work inside the rules before an IR35 compliance check proves the CEST tool to have made an inaccurate decision?”
Last August, The Telegraph referred to research from specialist IT recruiters CW Jobs, which found that the impact on contracting professionals of being forced into an “inside IR35” designation is hardly negligible. 71% of its clients had seen significant reductions in their incomes since the reforms were introduced last April, with a quarter of those affected reporting reductions of around 30%.
Mr Stride did commit to working with HMRC’s customers to enhance the service although Qdos believes he has missed the point. As Smith puts it, “If HMRC is serious about making CEST more reliable and improves its poor reputation among the UK’s independent workforce, it surely has to allow contractors to put forward their case for working outside IR35 in the public sector too.”