Could do better: Industry Verdict on HMRC’s New Employment Calculator

HMRC has updated its Check Employment Status for Tax (CEST) tool as promised and it’s fair to say the response has been mixed.

The online calculator is designed to show whether individuals on specific engagements should be classed as employed or self-employed for tax purposes.

The previous version of CEST was widely criticised as unfit for purpose ahead of changes to off-payroll working rules in April 2020.

Ian Anfield, managing director of Hudson Contract, said: “We have studied it from the perspective of our limited company clients and they have all emerged as compliant with IR35 legislation.

“The tool is more comprehensive than the last version, but I was left feeling the answers to some questions are not as simple as ‘yes or no’.

“Users are forced to give binary answers to open questions, which has to cause concern over the accuracy of determinations.”

The update generated much comment in the trade media titles with an interest in IR35.

IPSE told Accountancy Daily: “Until CEST more accurately reflects case law, we can expect more incorrect assessments and more tax tribunal defeats for HMRC.”

The Register, a global tech website, summed it up with the following headline: "UK taxman updates its employment-checking calculator for IR35: Still crap, say contractors."

Ian Anfield of Hudson Contract said: “With HMRC standing by CEST for determining the status of workers, we advise organisations seeking clarification on IR35 to contact us for advice and assistance.”