Her Majesty’s Revenue & Custom’s (HMRC) Check Employment Status for Tax (CEST) tool is “biased and hopelessly unreliable”, a UK contractor website has claimed.
After ContractorCalculator made multiple Freedom of Information (FOI) requests, HMRC provided it with a one-page list of 24 key employment status cases, including 18 IR35 tribunal cases, which it claims CEST was tested against to ascertain its accuracy. Alongside each case, an analysis was provided on the status assessment reached and why that particular judgment was made.
But ContractorCalculator claims that, on analysing all of the court cases listed by using 557 pages of court judgments available in the public domain, it discovered that HMRC’s employment testing conclusions were incorrect.
It attests that the CEST tool only gave an accurate outcome in 14 out of 24 cases – only 58%. In seven cases (29%), the answers were incorrect, while three were correct but for the wrong reasons – so-called false positives. In addition, three of the 14 cases that passed the test were over-reliant on substitution, without which, contrary to the direction of the courts, the correct result would not have been produced, the website claimed.
ContractorCalculator’s chief executive Dave Chaplin said: "With the taxman’s most recent claims debunked, it will be interesting to see how HMRC frames its response. Given the staunch opposition to HMRC’s flawed interpretation of mutuality of obligation, and this latest failed attempt to pull the wool over the sector’s eyes, the best the taxman can now claim is that CEST gives an answer which can only be half relied upon.”
But he added the situation was “not good enough” and as a result, the CEST tool “must be withdrawn".
Her Majesty’s Revenue & Custom’s (HMRC) Check Employment Status for Tax (CEST) tool is “biased and hopelessly unreliable”, a UK contractor website has claimed.
After ContractorCalculator made multiple Freedom of Information (FOI) requests, HMRC provided it with a one-page list of 24 key employment status cases, including 18 IR35 tribunal cases, which it claims CEST was tested against to ascertain its accuracy. Alongside each case, an analysis was provided on the status assessment reached and why that particular judgment was made.
But ContractorCalculator claims that, on analysing all of the court cases listed by using 557 pages of court judgments available in the public domain, it discovered that HMRC’s employment testing conclusions were incorrect.
It attests that the CEST tool only gave an accurate outcome in 14 out of 24 cases – only 58%. In seven cases (29%), the answers were incorrect, while three were correct but for the wrong reasons – so-called false positives. In addition, three of the 14 cases that passed the test were over-reliant on substitution, without which, contrary to the direction of the courts, the correct result would not have been produced, the website claimed.
ContractorCalculator’s chief executive Dave Chaplin said: "With the taxman’s most recent claims debunked, it will be interesting to see how HMRC frames its response. Given the staunch opposition to HMRC’s flawed interpretation of mutuality of obligation, and this latest failed attempt to pull the wool over the sector’s eyes, the best the taxman can now claim is that CEST gives an answer which can only be half relied upon.”
But he added the situation was “not good enough” and as a result, the CEST tool “must be withdrawn".
