Self-employed: Tax Avoidance

Treasury written question – answered on 10th March 2020.

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Photo of Ruth Cadbury Ruth Cadbury Labour, Brentford and Isleworth

To ask the Chancellor of the Exchequer, what assessment his Department has made of the effectiveness of the enhanced Check Employment Status Tool in relation to IR35.

Photo of Ruth Cadbury Ruth Cadbury Labour, Brentford and Isleworth

To ask the Chancellor of the Exchequer, what assessment he has made of the accuracy of the Check Employment Status Tool in correctly identifying the employment status of individuals in relation to IR35.

Photo of Ruth Cadbury Ruth Cadbury Labour, Brentford and Isleworth

To ask the Chancellor of the Exchequer, what steps his Department has taken to improve the accuracy of the Check Employment Status Tool since November 2019.

Photo of Ruth Cadbury Ruth Cadbury Labour, Brentford and Isleworth

To ask the Chancellor of the Exchequer, what plans he has to introduce changes to the Check Employment Status Tool ahead of reforms to IR35 within the private sector.

Photo of Jesse Norman Jesse Norman The Financial Secretary to the Treasury

HMRC developed the Check Employment Status for Tax (CEST) online tool to help organisations and individuals determine employment status for tax and decide whether the off-payroll working rules apply.

The CEST service was developed in conjunction with tax specialists, contractors and other stakeholders. It was rigorously tested against established case law and settled cases to ensure it provides accurate results in line with current binding judgments. In the vast majority of uses, CEST will determine whether the engagement is employed or self-employed for tax purposes. HMRC will stand by CEST’s results provided accurate and correct information is used, in accordance with HMRC’s guidance.

In November 2019, HMRC launched an enhanced version of CEST, having worked with over 300 stakeholders to identify improvements. The tool’s enhancements included making questions and the results clearer, increasing the number of questions to provide a more thorough assessment, and building in features to reduce user errors.

Since launch, HMRC have monitored customer feedback and have updated the tool’s language where this improves the customer experience. This includes providing additional help text and links to off-payroll guidance in HMRC’s Employment Status Manual. HMRC are continuing to monitor feedback with a view to making future usability updates.

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