HMRC has acted in a manner ‘akin to climate change denial’ in its public defence of its Check Employment Status for Tax (CEST) tool, says ContractorCalculator CEO Dave Chaplin.
In an open letter, the CEO of the contracting site cites widespread and indisputable evidence of CEST’s shortcomings, which he accuses the taxman of brazenly refusing to acknowledge.
“Our investigative work has unearthed a wealth of evidence exposing CEST’s inaccuracies and the unjust consequences of the assessments conducted – namely widespread false employment,” notes Chaplin.
“To date, the taxman has repeatedly claimed CEST is accurate despite widespread criticism of the tool and evidence suggesting otherwise. HMRC’s tin-eared stance on the matter is unacceptable and we are hoping that this open letter will prompt some answers. What we are witnessing at the hands of CEST is misrepresentation of the law by HMRC.”
HMRC encouraged to answer for CEST FOI findings
Chaplin’s letter follows a series of Freedom of Information (FOI) findings of CEST assessments returning near-unanimous ‘inside IR35’ results, when conducted by numerous public sector organisations.
FOI responses revealed that Network Rail and High Speed 2 (HS2) had found 99% and 98% of contractors within scope of IR35 in 2018 respectively, having used CEST. Meanwhile, between April 2017 and January 2019, CEST led the Met Office to deem 98% of its contractors ‘employed for tax purposes’.
Despite the highly contentious figures, HMRC recently reiterated its confidence in the tool. In response to the Network Rail findings, an HMRC spokesperson stated:
“CEST was rigorously tested against known case law and settled cases. It is accurate and HMRC stands by the result if the tool is used correctly. CEST is not biased towards an employment outcome, giving a self-employed outcome the majority of the time.”
Chaplin disagrees: “Despite having had two years to do so, HMRC is yet to provide us with evidence of CEST’s ‘rigorous’ testing or its accuracy and our FOI findings clearly demonstrate that it does not provide a self-employed outcome ‘the majority of the time’.”
Failure to make HMRC answer for CEST is ‘criminal’
HMRC’s previous failures to substantiate its claims haven’t gone unnoticed. They are addressed in Chaplin’s letter which details the taxman’s meagre and ultimately disproven efforts to prove CEST’s accuracy.
With the 28 May deadline for HMRC’s latest private sector Off-Payroll consultation fast approaching, Chaplin is hoping that holding the taxman to account will, at the very least, spark some debate regarding certain issues with Off-Payroll that HMRC would otherwise happily overlook:
“The fact that HMRC still hasn’t been made to answer for the chaos caused by CEST beggars belief. Until CEST is fixed and the high risk of contractors being subjected to false ‘inside IR35’ assessments is negated, a private sector roll-out of the Off-Payroll rules shouldn’t even be considered as an option.”