COMPLIANCE
CEST – c’est la vie?!
SamanthaMannMAATMCIPPDip, CIPP senior policy and research officer, reviews recent developments
F irst launched in 2017 to support the delivery of off-payroll working reforms to public sector engagements, the check employment status for tax tool – CEST – has not been without its critics. When further reform was announced, this time to medium and large entities within the private and third sectors, it came with the assurance that CEST would be reviewed with the intention to make improvements where needed. Since the announcement was made, HM Revenue & Customs (HMRC) has worked with stakeholders to gather views and experiences, initially to establish problem areas and then develop improvements to CEST. Using agile methodology, HMRC’s digital teams have met with users and stakeholders to firstly establish what the problems are, to look at how improvements can be made and by using iterative steps build, test and review solutions. The beta product was launched, much to everyone’s surprise, in late November (during general election purdah) and alongside it, updated guidance. During this time, the original CEST tool remained available for use.
of users in decision-making when considering: ● whether off-payroll working rules will apply to a contract – aimed at hirer, the worker, the agency, or ● whether work is considered to be that of employment or self-employment – aimed at the hirer or the worker. CEST is a tool that considers the outcome for tax purposes only and not a tool to establish whether a worker is entitled to employment rights. As reforms continue in this space so too does the call for government to publish their response to the Employment status consultation (http://bit.ly/2TKiXdK) held in 2018 which, it is hoped, will provide much greater clarity regarding worker rights. The CEST tool is not compulsory to use; engagers or employers can use a variety of methods to consider the status of a contract for tax purposes, and this will depend upon their available resources and knowledge. Other options include: ● in-house specialist ● external professional guidance such as employment lawyer, employment tax professional ● software/tools that provide a similar process to CEST. The critical factor is that due process is followed that will enable the engager,
if challenged, to be able to demonstrate that they took reasonable care in reaching their decision. Once made, the decision, together with the reasons for that decision, need to be provided to the worker and to the feepayer, even where the contract is outside of ‘IR35’ (off-payroll). From April 2020, there will be an obligation on the client engager to provide a client-led dispute process in the event that the worker or feepayer disagrees with the status determination made. The engager will have 45 days in which to respond to any appeal. In the event that the engager fails to make a determination or to respond within 45 days of any appeal, they will become responsible for pay as you earn (PAYE) income tax and National Insurance contributions (NICs) arising from the contract. CEST usability During the review of CEST, CIPP members attended interviews and group review meetings to comment on and feed in suggestions for improvements. In a test environment, they agreed that the tool was easier to use. Members who predicted they would have to use CEST, because the new reforms would impact their organisation, but hadn’t yet had any experience of it, felt confident at the test stage at least that it would be easy to use. One comment made by all, however, was the recognition that processes would need to be in place to ensure that they
Audience The CEST tool will support a range
...engagers or employers can use a variety of methods to consider the status of a contract...
| Professional in Payroll, Pensions and Reward | February 2020 | Issue 57 26
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