CEST off-payroll tool had no formal accuracy testing, admits UK’s HMRC CEST off-payroll tool had no formal accuracy testing, admits UK’s HMRC

CEST off-payroll tool had no formal accuracy testing, admits UK’s HMRC
13 Feb 2019

Her Majesty’s Revenue & Customs (HMRC) has conceded that its controversial Check Employment Status for Tax (CEST) tool has still not undergone any formal testing to validate its accuracy.

In fact, the UK tax agency has failed to produce any detailed evidence of its accuracy claims since CEST's release almost two years ago, despite repeated claims from HMRC and the Treasury that the tool was under continual review, according to The Global Recruiter.

It has also emerged that not even an informal assessment was conducted to ensure that CEST met the Government’s Digital Service (GDS) standards, which are used “to check whether a service is good enough for public use”. The admissions came to light in response to various Freedom of Information (FOI) requests by contracting authority Contractor Calculator.

The news comes as HMRC faces mounting scrutiny over the design and development of the tool, which is believed to have already forced thousands of public sector contractors into false employment, including hundreds at the BBC.

The broadcaster revealed that 95% of its freelancers were deemed to be ‘employed’ following a CEST assessment - despite the fact that 90% of the same workers had been deemed as ‘self-employed’ in a previous employment status test developed in conjunction with HMRC. Speaking to the Public Accounts Committee, BBC director general Lord Hall conceded that the organisation had left many freelancers with little choice but to work via a limited company.

Responding to ContractorCalculator’s FOI request, HMRC said: "No further documentation has been created since April 2018 where CEST has been subsequently tested against court cases." It was alluding to 24 employment status cases that were mentioned in response to a previous FOI request by the organisation in April 2018.

HMRC had attempted to use the single page of claims as proof of CEST’s accuracy. But a rigorous re-testing of the 24 cases conducted by ContractorCalculator, which produced 511 pages of evidence, found the tool to return a flawed assessment 42% of the time.

Dave Chaplin, ContractorCalculator’s founder and chief executive, said: “HMRC imposed CEST upon the public sector and by doing so has cheated many honest taxpayers out of thousands of pounds in the process with a tool that is not fit for purpose and does not work. We debunked HMRC’s claim that CEST is accurate and by doing so we thought that the taxman might make some effort to vindicate its tool but, two years on, we can see that CEST has been stuck in beta mode since its inception.

It would be interesting to see what enhancements HMRC intended to make in preparing for rolling out Off-Payroll to the private sector, he added. “HMRC is setting itself up for a colossal fall and more worryingly will be playing havoc with the livelihoods of thousands of hard-working freelance professionals,” Chaplin warned.

Emma Woollacott

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

OTHER STORIES THAT MAY INTEREST YOU

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Her Majesty’s Revenue & Customs (HMRC) has conceded that its controversial Check Employment Status for Tax (CEST) tool has still not undergone any formal testing to validate its accuracy.

In fact, the UK tax agency has failed to produce any detailed evidence of its accuracy claims since CEST's release almost two years ago, despite repeated claims from HMRC and the Treasury that the tool was under continual review, according to The Global Recruiter.

It has also emerged that not even an informal assessment was conducted to ensure that CEST met the Government’s Digital Service (GDS) standards, which are used “to check whether a service is good enough for public use”. The admissions came to light in response to various Freedom of Information (FOI) requests by contracting authority Contractor Calculator.

The news comes as HMRC faces mounting scrutiny over the design and development of the tool, which is believed to have already forced thousands of public sector contractors into false employment, including hundreds at the BBC.

The broadcaster revealed that 95% of its freelancers were deemed to be ‘employed’ following a CEST assessment - despite the fact that 90% of the same workers had been deemed as ‘self-employed’ in a previous employment status test developed in conjunction with HMRC. Speaking to the Public Accounts Committee, BBC director general Lord Hall conceded that the organisation had left many freelancers with little choice but to work via a limited company.

Responding to ContractorCalculator’s FOI request, HMRC said: "No further documentation has been created since April 2018 where CEST has been subsequently tested against court cases." It was alluding to 24 employment status cases that were mentioned in response to a previous FOI request by the organisation in April 2018.

HMRC had attempted to use the single page of claims as proof of CEST’s accuracy. But a rigorous re-testing of the 24 cases conducted by ContractorCalculator, which produced 511 pages of evidence, found the tool to return a flawed assessment 42% of the time.

Dave Chaplin, ContractorCalculator’s founder and chief executive, said: “HMRC imposed CEST upon the public sector and by doing so has cheated many honest taxpayers out of thousands of pounds in the process with a tool that is not fit for purpose and does not work. We debunked HMRC’s claim that CEST is accurate and by doing so we thought that the taxman might make some effort to vindicate its tool but, two years on, we can see that CEST has been stuck in beta mode since its inception.

It would be interesting to see what enhancements HMRC intended to make in preparing for rolling out Off-Payroll to the private sector, he added. “HMRC is setting itself up for a colossal fall and more worryingly will be playing havoc with the livelihoods of thousands of hard-working freelance professionals,” Chaplin warned.

Emma Woollacott

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

OTHER STORIES THAT MAY INTEREST YOU

HMRC's CEST tool blamed for BBC misclassifying workers

HMRC's employment status tool branded 'hopelessly unreliable'

HMRC's calculators and tools

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