The data shows that between November 2019 and November 2020, Check Employment Status for Tax (CEST) was used 975,416 times, delivering the following results:
52 per cent of cases determined outside IR35 (505,598)
- 29 per cent inside IR35 (281,099)
- 19 per cent undetermined, with CEST unable to deliver an answer (188,719)
When CEST cannot provide an answer, users are told to check the information they have inputted, referred to the Employment Status Manual and given a HMRC phone number and email address they can contact.
Seb Maley from IR35 tax specialists, Qdos, said: “These figures are damning. It’s worrying enough that CEST has been used nearly one million times in the past year, but that it hasn’t been able to make up its mind a staggering 188,000 times is frightening.
"To make matters worse, people are then expected to work it out themselves by checking the complex employment status manual or get in touch with HMRC, whose own tool couldn’t help them in the first place.
"It’s staggering that CEST allows so many contractors and businesses to be left in limbo. These are decisions that carry with them tens, sometimes even hundreds of thousands of pounds in tax liability.
“This data is gathered from the latest version of CEST, which as we approach IR35 reform clearly isn’t up to scratch. Aside from being indecisive, the tool isn’t aligned with IR35 case law and has even been dismissed in court. Fortunately, CEST isn’t mandatory, which is why I urge businesses to consider alternative ways to assess status that will provide a well-informed answer 100 per cent of the time.”
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Susie Hughes © Shout99 2020