HMRC revamps CEST off payroll working tool

With four months to go until the IR35 off payroll rules start to apply in the private sector, HMRC has published its first update to its controversial check employment status for tax (CEST) tool since it was launched in 2017

From April 2020, the off-payroll rules which already apply to contractors engaged in the public sector will be rolled out to medium and large sized private companies.

This will see responsibility for determining whether an engagement falls within IR35 rules shift from the worker’s personal service company (PSC) to the engager (the business which requires the worker’s services).

Where the rules do apply, the responsibility for applying the appropriate tax and National Insurance contributions will fall on the engager or agency which pays the worker’s PSC.

CEST, the online tool which workers – and now hirers/engagers – can use to determine employment status, has attracted considerable controversy in the two years it has been available, with contractors claiming that in many instances it fails to reflect the nature of their work.

HMRC has now updated CEST, stating that if the engager does not know the worker, the tool will not ask questions about their circumstances, and adding some extra questions.

Speaking on BBC Radio 4’s Money Box programme, Chancellor Javid, said: ‘In our manifesto we have promised a review of how we can help the self-employed with things like mortgages and pensions.

‘One thing in particular I want to look at again are the proposed changes to IR35. I want to make sure that the proposed changes are right to take forward.

‘We have made it clear in our manifesto that we are on the side of self-employed people. We will be having a review, and it makes sense to include the proposed changes to IR35 in that review.’

In the same programme the Chancellor said he expects the Loan Charge review to report this year, despite currently being on hold due to General Election purdah rules.

The review into the Loan Charge was commissioned by Chancellor Javid in September, and is being led by Sir Amyas Morse, formerly head of the National Audit Office.

HMRC Guidance, Check employment status for tax (CEST) updated 25 Nov 2019

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