HMRC have made an on-line tool "CEST" available to the public for “assessing” the employment status of individuals for a number of years now, and criticism of their content and methodology has been present from the beginning. Not surprisingly, the view that HMRC slant their assessments towards employed outcomes rather than self-employed engagements (and not just with their on-line tools) should come as a shock to no one – and the reason has always been the same, and it’s simple; employment raises significantly more tax than self-employment – hence the slant towards employed outcomes.
So, we frequently receive calls from prospective clients who have fallen foul of the CEST tool (it stands for check employment status for tax, in case you were wondering) and principle amongst the issues is that it frequently asks binary questions (yes or no) with no room for nuance or context that would be key to reflecting the real-world arrangements that are in place - and would influence the answer. It’s often just not possible to provide an accurate reflection of the working reality with the tool. Furthermore, it simply does not reflect the guidance that the courts have provided in relation to employment status. The supreme court – the highest authority in the land – gave a well-reasoned detailed assessment of the whole issue of employment status in the 2021 Uber judgement, and the CEST has yet to adopt the guidance provided. For instance, CEST continues to underplay the control element of a working relationship – and the Supreme Court has made control one of the key aspects when considering employment status.
Let me just give you one example of how easy it is to get on the wrong side of the tool. A recent new client had completed the assessment, and found their sub-contractors were classed as employees by the CEST. – To cut the long story short even though they had been through the process alongside their accountants they fell into the trap of thinking of the exceptions to the questions rather than reflecting the reality of the engagement - and more importantly, the principles that underpin the engagement.
So, in short unless you are knowledgeable in tax and employment law, and unless you understand the principles at stake then it’s very easy to obtain the incorrect result.
Fortunately, EEBS have 21 plus years of experience in this field and we can easily assist you with your assessment and provide you with a compliant solution if required. Get in touch with the team should you need some helpful and friendly advice.
