IR35 and HMRC

Do you have to use the HMRC CEST tool to check IR35 status?

Using HMRC's CEST (Check Employment Status for Tax) tool to assess IR35 status is not a legal obligation. The decision of how to evaluate their IR35 status is left to the discretion of the individual or company.

More detail

The CEST (Check Employment Status for Tax) tool was developed by HM Revenue and Customs (HMRC) to determine individuals' employment status for tax purposes, including IR35 compliance. However, the tool was created years ago and is currently misaligned with the law, making it unreliable. The CEST tool was developed based on HMRC's "policy view" of status, which was proven incorrect by the Court of Appeal in April 2022.

While the CEST tool can sometimes help determine IR35 status, it is not a guarantee of compliance with IR35 rules. HMRC has acknowledged that the tool is not intended to provide a definitive answer and that users should carry out their own assessments and seek professional advice if necessary. The accuracy of the tool has been repeatedly challenged, and HMRC has shown that they will not stand by a CEST assessment, nor do they use it for formal enquiries.

The tool has been described by some as "the most expensive free tool anyone will ever use," given the £263m worth of penalties issued to the public sector who used it.

It's important to note that relying solely on the CEST tool can be risky, and it is advisable to seek professional advice from IR35 experts when assessing IR35 status.

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