Top accountant asks contractors to share their CEST experiences, good and bad

Contractors can now have their say to a veteran chartered accountant on what’s wrong – and right potentially – with CEST.

Graham Jenner, founder of accountancy firm Jenner & Co, says he wants to hear from contractors about how HMRC’s tool to test IR35 status has impacted them.

'Full analysis'

Sounding aware that the Revenue’s Check Employment Status for Tax has been scrutinised and advised on before, Jenner told ContractorUK that his probe will be a “full analysis.”

“This will be one of the most comprehensive reviews of the tool [to date],” the veteran accountant said.

“Whether or not CEST is fit for purpose…[will be informed by] insight from contractors, as to how they’ve been affected by the IR35 changes and the way CEST [factors them in]. ”

'Inappropriate'

Jenner’s CEST probe coincides with HS2 fessing up in its 2021-2022 annual accounts that following its usage of the HMRC tool, £9.5million has been set aside due to ‘inappropriate’ classification of contractors.

Qdos will outline the implications of this sixth taxpayer body erring on IR35 (taking non-compliance by CEST-using bodies to over £253m), this Wednesday, exclusively on ContractorUK.

Seb Maley, Qdos’ CEO will also assess implications for the high speed railway project as a whole; the contractors concerned, and contractors at other organisations where CEST is used.

'CEST tool washes it all away'

But IR35 contract reviewer Mr Maley is already adamant that introducing the HMRC tool at private or public outfits can undermine just about everything good those outfits did beforehand.

“The issue is that the government can offer as much help and support to businesses as it wants, but it's wasted the moment the CEST tool is used to assess employment status.”

Online, Mr Maley continued: “CEST, which many of you will know for determining IR35 status, is also used to assess if sole traders should be classed as self-employed or employed. 

“Ultimately, CEST poses a significant risk to businesses and shouldn’t be relied upon to determine employment -- or IR35 – status.”

'Get HMRC to improve CEST'

Last month, accountant Louise Rayner asked her LinkedIn followers what might be the best way “to get HMRC to improve CEST.”

Since her query, the government signalled CEST enhancements will not be made, saying in its employment status consultation reply that in the ‘majority of cases,’ CEST “helps.”

Nonetheless, Rayner, boss at NumberMill tabled what she called a “possible solution.”

'Urgency'

“If CEST has made an incorrect determination that has caused the [subsequent HMRC] enquiry, the taxpayer gets let off the tax because they only followed HMRC’s advice?”

Realising the low likelihood of officials ever agreeing to such a let-off, Rayner mused: “That ought to inject a sense of urgency to getting it right, don’t you think?”

Asking non-rhetorical questions about CEST is fellow tax adviser Mr Jenner, who says what he finds out about HMRC’s much-maligned tool will be collated and published in a report.

'Struggling'

Inviting individuals or businesses in the contractor sector to message him with answers, Mr Jenner queried: “Have you had to stop working through your limited company, because the CEST tool was used to determine that your contract was inside IR35?

“Are you struggling to obtain contracts for your limited company, because end-clients have stopped allowing contractors to operate through their own limited company?

“Are you an end-client and have difficulty attracting contractors following 'within IR35' determinations from CEST? [Or finally] are you an agency, struggling to find enough contractors willing to work outside IR35?”

NumberMill, which would invariably make good respondent to the questions given it serves both agencies and contractors, says that ultimately, CEST needs ‘sorting out,’ so that it can more properly ‘do the job it’s meant to do.’