IR35 expert, Qdos, have reacted to damning data that exposes the flaws of HMRC’s Check Employment Status for Tax (CEST) tool, used by businesses to determine the IR35 status of contractors.
The government’s own figures available here https://bit.ly/2Sv4SlZ show that between 25th November 2019 and 31 May 2021, CEST was used 1,018,250 times, delivering the following results:
– 499,974 were deemed outside IR35
– 308,176 were deemed inside IR35
– 210,100 were undetermined
“I’m astonished that the government still stands by an IR35 tool that hasn’t been able to make up its mind over 210,000 times,” Qdos CEO, Seb Maley, commented. “Here we have proof that CEST has left hundreds of thousands of contractors and businesses in limbo, unsure of whether a contract belongs inside or outside IR35. It should be the final nail in the coffin for this fundamentally flawed tool.
“I’m interested to find out what has happened to these engagements,” he added. “Have HMRC got the resource – not to mention expertise – to offer support on this scale? I doubt it. The staggering number of undetermined results leads to confusion, delay, and in many cases, non-compliance.
“It’s important businesses realise that CEST is not mandatory,” concludes Maley, “And not only is it indecisive, it’s flawed logic – which isn’t aligned with IR35 case law – and lightweight nature means the decisions it does make should be checked by an expert.”