On 25 November 2019 HMRC issued a new version of their Check Employment Status for Tax (CEST) tool. The tool is designed to give businesses who engage contractors who operate through Personal Service Companies guidance on status for employment tax purposes and is being used with a much greater frequency given the upcoming changes to the off-payroll workers rules (IR35) which will apply from 6 April 2020. As a reminder, the new rules will shift the responsibility for assessing a contractor’s employment status from intermediaries such as Personal Service Companies (PSCs) to the end-user of a contractor’s services.
The updated CEST tool asks a number of different questions to the previous version. We have summarised these new questions below. It also includes a number of helpful links to HMRC guidance (which has also been updated) on certain issues within the tool itself.
The right of a contractor to send a substitute worker in their place and an end-user’s obligations should the contractor do so are a key test in assessing employment status. The updated CEST tool uses a more sophisticated logic when asking substitution related questions, steering the user through different sets of questions which are influenced by their previous answers.
Provision of equipment