HMRC TOOL LEAVES 200K CONTRACTORS ‘IN LIMBO’

Is HMRC IR35 tool failing?

Figures from HMRC show that their own IR35 status online tool fails in one in five cases to determine the IR35 status of contractors, according to news service for freelancers.

Shout99 says information published by HMRC under a Freedom of Information release shows that between November 25, 2019, and May 31 this year the Check Employment Status for Tax (CEST) tool was used 1,018,250 times.

Results

The website reports that the data revealed that 499,974 contractors were deemed outside IR35, 308,176 were deemed inside IR35 and 210,100 were undetermined.

Flaws

Shout99 quotes IR35 tax experts Qdos as claiming that the ‘damning data’ exposed the flaws in the CEST system.

The report quotes Seb Maley from Qdos as saying: “I’m astonished that the Government still stands by an IR35 tool that hasn’t been able to make up its mind over 210,000 times.”

Proof

“Here we have proof that CEST has left hundreds of thousands of contractors and businesses in limbo, unsure of whether a contract belongs inside or outside IR35. It should be the final nail in the coffin for this fundamentally flawed tool,” the quote continues on Shout99.

“I’m interested to find out what has happened to these engagements. Have HMRC got the resource – not to mention expertise – to offer support on this scale? I doubt it. The staggering number of undetermined results leads to confusion, delay, and in many cases, non-compliance.”

Indecisive

The website concludes the quote with: “It’s important businesses realise that CEST is not mandatory. And not only is it indecisive, its flawed logic – which isn’t aligned with IR35 case law – and lightweight nature means the decisions it does make should be checked by an expert.”

Read on

Read the full article on the Shout99 website.

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