CEST tool: what the experts say

Back in March I attended a fascinating select committee session on BBC pay. It was here that the real practical problems with IR35 and HMRC’s Check Employment Status for Tax (CEST) tool were laid bare. Most shockingly of all, we heard how the stress of possibly appearing in court because of an IR35 investigation led a radio presenter to attempt suicide.

Presenter after presenter lined up to tell MPs that, in the words of Radio 4’s Front Row host Kirsty Lang, ‘the CEST test is not fit for purpose. It absolutely does not apply to the kinds of jobs that we do’. ‘An impossible test’ was how Paul Lewis, host of Money Box, neatly summarised the situation. Lord Hall, Director-General of the BBC, also acknowledged that CEST ‘has caused a good deal of confusion for individuals’.

It is now crystal clear that CEST does not work in the real world. Earlier this week we explained in a blog that HMRC’s argument that mutuality of obligation (MoO) exists in every engagement has been fatally undermined by recent tax tribunal cases.

Those responsible for making IR35 determinations since 2017 have also recognised the problems with the tool. Tania Bowers, who represents agencies through the Association of Professional Staffing Companies (APSCo) notes ‘the lack of trust…in the methodology of the CEST test’. She goes on to call for reform, arguing that HMRC must ‘revise the CEST test to be consistent with case law and the methodology used by the specialists in the marketplace or replace it altogether’.

It’s not just in the world of media where people have been tearing their hair out over CEST. The healthcare sector has also been at the sharp end of the problems, with doctors and nurses finding it increasingly difficult to operate in the NHS. Dr Iain Campbell of the Independent Health Professionals Association (IHPA) slammed the ‘rigging of the…digital tool and kangaroo court assessments across the whole public sector’.

Perhaps the biggest issue that CEST runs into is reality. The truth is that it simply does not stand up to scrutiny when cases are taken to court or tribunal. As leading tax adviser David Kirk outlines, ‘CEST adopts a tick-box mentality, as tools of this kind do.  But the courts have said that you can’t take that approach when looking at employment status… It is only a matter of time before we get the tribunals making decisions that do not agree with CEST, and then where will we be?’.

It is time for policymakers to recognise this stark reality. As a result of faulty CEST assessments we have seen chaos in the public sector – shortages, delays to projects and contractors leaving en masse. Government must reconsider its approach and not risk hitting the whole economy by repeating the same mistakes in the private sector. To regain the trust of industry, government must conduct an independent review of the CEST tool. If the review finds CEST is not up to the job, the only option will be to abolish it altogether.

Meet the author

Jordan Marshall

Policy Development Manager