Using the CEST tool

The revised check employment status for tax (CEST) tool is much improved on the earlier version, but it is still not free of bias, as we reported on 28 November 2019.

The new CEST tool does not test for the existence of a mutuality of obligation (MOO), in spite of the fact that several recent IR35 cases have turned on this factor. HMRC’s view is that if there is a contract in place then MOO must exist, so only the other factors of employment/ self-employment have to be tested.

The instructions for operating the CEST are confusing. If you are testing a contract in the private sector which is operating before 6 April 2020, you need to choose the option “make a new determination”. If the contract you are testing is in the public sector you need to choose “check a determination”. HMRC has been asked to improve the guidance around this point.

The tool still asks whether the worker is an “office holder” – this means an officer holder of the engager, not an officer holder of the intermediary or of the personal service company.

The CEST tool can be used by a worker to test whether they should be treated as employed or self-employed for tax purposes. The worker can print out a copy of the report and show it to their engager. This may prevent low paid workers from being falsely categorised as self-employed in order to save the engager employer’s NIC.

Unfortunately, the CEST tool can’t give a decision on the basis of employment law, so the low paid worker will still be in the dark about what employment rights they have.

Written by the Tax Advice Network