UK and International Tax news

HMRC Updates Its Online CEST Tool

Friday 10th January 2020

HMRC has recently updated its online CEST tool in advance of the April 2020 reforms to off payroll working.

The off-payroll working rules (commonly known as IR35) are supposed to ensure that individuals who work like employees pay broadly the same income tax and national insurance contributions as employees, regardless of the structure they work through. The rules do not affect the self-employed.

From April 2020, large and medium sized organisations in the private and voluntary sectors must determine whether their engagements with contractors fall within the ‘IR35’ off-payroll working rules.

HMRC has now relaunched its online CEST tool and published updated user guidance to assist workers, engagers and agencies to determine whether a particular engagement falls within the rules.

The CEST tool was first introduced in 2017 to help individuals and organisations decide if a worker should be treated as employed for tax purposes. It takes users through straightforward step-by-step questions. According to HMRC, the tool was rigorously tested against case law and settled cases by officials and external experts. It provides accurate results and HMRC will stand by the result produced by the tool provided the information input is accurate and the tool is used in accordance with our guidance.

HMRC state that the updated CEST will be clearer, reduce user error and consider more detailed information.

The rules will apply to ensure that workers, who would have been an employee if they were providing their services directly to the client, pay broadly the same tax and national insurance contributions as employees.

If the rules apply, tax and NICs must be deducted from fees and paid to HMRC.

From 6 April 2020 all public sector authorities and medium and large-sized private sector clients will be responsible for deciding if the rules apply.

If you would like more information on the above, please contact Keith Rushen on 0207 486 2378.

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