[UK] IR35 status check tool fails to return a result in nearly 20% of cases

[UK] IR35 status check tool fails to return a result in nearly 20% of cases
15 Dec 2020

Further concerns have been raised about the effectiveness of HM Revenue & Customs’ (HMRC) frequently criticised IR35 tax status checker tool after it was revealed that it failed to provide a response in nearly one in five uses.

Data published by HMRC on December 10, 2020, reportedly states that the tool was used a total of 975,416 times in the 12 months to 24 November 2020 to determine the IR35 tax status of contractors. The status checks were made in advance of a reform of the tax avoidance regulations coming into force in the private sector in April 2021.

The Check Employment Status for Tax (CEST) tool asks users a series of questions about the nature of the work they do and how that work is carried, in order out to assess whether their engagements should fall within the scope of the IR35 off-payroll legislation. (Link via original reporting)

In 52 per cent of cases (505,598 uses), the answers received from using the tool concluded that the person or engagement being assessed should be classified as working outside the IR35 rules. 29 per cent (281,099) were confirmed to be falling inside. 

In 19 per cent of cases (188,719), however, the tool was unable to return a conclusive response during this time period, prompting more worries about the tool’s suitability on the basis that there is likely to be a surge in the number of people relying on it in the coming months. Computer Weekly looks at how the tool has failed and why it will soon be needed more than ever. 

Further concerns have been raised about the effectiveness of HM Revenue & Customs’ (HMRC) frequently criticised IR35 tax status checker tool after it was revealed that it failed to provide a response in nearly one in five uses.

Data published by HMRC on December 10, 2020, reportedly states that the tool was used a total of 975,416 times in the 12 months to 24 November 2020 to determine the IR35 tax status of contractors. The status checks were made in advance of a reform of the tax avoidance regulations coming into force in the private sector in April 2021.

The Check Employment Status for Tax (CEST) tool asks users a series of questions about the nature of the work they do and how that work is carried, in order out to assess whether their engagements should fall within the scope of the IR35 off-payroll legislation. (Link via original reporting)

In 52 per cent of cases (505,598 uses), the answers received from using the tool concluded that the person or engagement being assessed should be classified as working outside the IR35 rules. 29 per cent (281,099) were confirmed to be falling inside. 

In 19 per cent of cases (188,719), however, the tool was unable to return a conclusive response during this time period, prompting more worries about the tool’s suitability on the basis that there is likely to be a surge in the number of people relying on it in the coming months. Computer Weekly looks at how the tool has failed and why it will soon be needed more than ever. 

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