Since changes to IR35 and the off-payroll working rules came into force on 6 April 2021, medium or large UK businesses have borne the responsibility of determining the employment status for tax purposes of many individuals providing their services through an intermediary – most often a personal service company.

To assist in that determination, HMRC created a tool called CEST (“Checking Employment Status for Tax”). Although CEST has come in for criticism, HMRC views it as reliable and has always said it would “stand by” determinations given by the CEST tool. B P Collins’ employment team explain the latest changes.

On 2 August 2022, HMRC went a step further. It updated its manuals to say that if the information inputted into CEST is accurate and the output is determinate, then the result produced by CEST will represent HMRC’s “known position” on the tax status of a given engagement.

The upshot of HMRC adopting the output of CEST as a “known position” is that if CEST is completed correctly in relation to a given engagement, then businesses must notify HMRC if they wish to adopt a different interpretation.

This possibility of being required to notify HMRC is something which is sure to give businesses pause for thought when determining employment status for tax purposes.

If you need advice about employment status, speak to one of our experts by contacting the employment team at 01753 889995 or email enquiries@bpcollins.co.uk.


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Related Team Specialists

Jo Davis
Practice Group Leader
Greg Clark
Solicitor

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