HMRC employment status test tool not working properly

HMRC’s Check Employment Status for Tax (CEST) is still not properly tested two years since its release, according to a Freedom for Information (FOI) request by UK contracting industry organisation

HMRC has conceded that its controversial Check Employment Status for Tax (CEST) tool has still not undergone any formal testing to produce detailed evidence of its accuracy claims since its release almost two years ago, despite repeated claims from HMRC and the Treasury that the tool is under continual review.

HMRC also confessed that not even an informal assessment was conducted to ensure that CEST meets the Government’s Digital Service (GDS) Standards, used ‘to check whether a service is good enough for public use’, something the Chartered Institute of Taxation also highlighted last year.

The admissions came to light in response to Freedom of Information (FOI) requests by contracting authority ContractorCalculator, the website for the UK contracting industry.

It says the news comes as HMRC faces mounting scrutiny over its design and development of the tool, which is believed to have already forced thousands of public sector contractors into false employment, including hundreds at the BBC.

ContractorCalculator added that BBC heads revealed that 95% of freelancers were deemed employed following a CEST assessment when 90% of those same workers had been deemed self-employed in a previous employment status test developed in conjunction with HMRC.

Responding to the FOI request, HMRC said: ‘No further documentation has been created since April 2018 where CEST has been subsequently tested against court cases’, alluding to some 24 employment status cases provided in response to a previous FOI request made by ContractorCalculator in April 2018.

HMRC had attempted to use the single page of claims as proof of CEST’s accuracy. However, a rigorous re-testing against the 24 cases by ContractorCalculator, which produced 511 pages of evidence, found the tool to return a flawed assessment 42% of the time.

Dave Chaplin, chief executive officer and founder of ContractorCalculator said: “HMRC imposed CEST upon the public sector and by doing so has cheated many honest taxpayers out of thousands of pounds in the process with a tool that is not fit for purpose and does not work.

“We debunked HMRC’s claim that CEST is accurate and by doing so we thought that the taxman might make some effort to vindicate its tool but, two years on, we can see that CEST has been stuck in beta mode since its inception.  For a solution of such importance you would expect to see thousands of pages of testing documentation, not one single sheet of unsubstantiated claims.  HMRC has virtually nothing and a tool that is making wrong employment status assessments.

“HMRC has pledged to work with stakeholders to improve CEST but the reality is that it has not been working on the tool and has continued to issue tax bills off the back of faulty results.  It will be interesting to see what enhancements HMRC is planning to make in preparation for rolling out Off-Payroll into the private sector.  HMRC is setting itself up for a colossal fall and more worryingly will be playing havoc with the livelihoods of thousands of hard-working freelance professionals.”

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