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How to safely use HMRC’s revamped CEST

25 November 19 | By: Jas Jhooty

New version of CEST

HMRC’s previous version of their Check of Employment Status Tool (CEST) has been much maligned for missing out key employment status factors such as Mutuality of Obligations. However, today HMRC have released an enhanced version of CEST and HMRC have claimed that this new version is clearer, reduces user error and considers more detailed information.

HMRC have also confirmed that they will stand by the results given by their revamped tool, provided the information entered is accurate and it is used in accordance with their guidance.

HMRC Support

In a further effort to assist businesses get the employment status of their contractors correct, HMRC are also offering advice and support to businesses affected by the IR35 reforms and have stated that they will not open enquiries into earlier years unless they suspect that fraud or criminal behaviour has occurred.

Warning

This all sounds like good news but we must warn you to take HMRC’s last statement with a large pinch of salt.

Having dealt with many recent HMRC enquiries we are aware that HMRC are like the proverbial “dog with a bone” when they receive any information that relates to a contractor not having declared themselves to be within the existing IR35 rules.

As well as the contractor having to pay PAYE tax & Class 1 NIC on their past income, in some cases this has even led to contractors being able to claim backdated statutory payments such as accrued holiday and sick pay from their deemed employers.

How emTax can help

To safeguard yourselves it would be advisable to get advice from our qualified employment tax consultants on how you should be changing your contracts and working conditions now, before you obtain any CEST based Status Determination Statement (SDS) rulings.

Our consultants can review your existing terms of engagement with your contractors and advise you on how you can safely amend these practices to legitimately maximise the number of contractors that will fall outside of the new IR35 provisions.

Don’t forget that you still have over four months remaining to implement any recommended changes. Your SDS rulings are only due to come into force in April 2020 and it is the contractual and working conditions that are in force in April 2020 that have to be taken into account when arriving at your contractors’ SDS.

Our consultants can also offer advice on how to deal with any contractors that are deemed to fall within the new IR35 provisions.
For more information about this timely and invaluable service, please do not hesitate to contact us.

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