IR35: HMRC launches updated CEST service

HM Revenue & Customs (HMRC) has launched an updated Check for Employment Status for Tax (CEST) service ahead of the introduction of the IR35 off-payroll working rules for the private sector on 6 April 2020.

The CEST tool is used to define whether a contractor or employer should be classed as employed or self-employed for tax purposes, in line with the IR35 rules.

With the IR35 regulations set to come into force for the private sector next year, the tool is vital for many individuals to ensure that they are paying tax under the correct employment status.

The CEST service was created in March 2017 by the Government, with HMRC stating that it would enhance the tool prior to the IR35 rules coming into force for the private sector.

Around 30 questions have been updated in the CEST tool, with several key industry bodies and stakeholders contributing to the tool by testing out the new version.

The new tool has also been rigorously tested against case law and settled cases by external experts, with the CEST tool now returning a judgement on whether or not IR35 legislation will apply.

Questions cover subjects such as working arrangements, financial risk, worker’s duties, contracts and worker’s involvement.

The main political parties have also stated that a review of the IR35 rules may take place after the General Election, while experts have also called for considerations to be made for more specific sectors, such as media, film and TV, where CEST determinations can be more complex.

If you need help and advice with matters relating to the upcoming changes to the IR35 regulations, contact our expert team today.