Less than a quarter of contractors would work with firms that use HMRC’s IR35 tool (CEST)

IR35, Off Payroll Reform

Businesses urged to avoid Government’s flawed IR35 tool after contractors highlight concerns

As the contracting sector closes in on 6th April 2021 and the arrival of IR35 reform in the private sector, it has come to light that less than one quarter (23%) would work with a client or through an agency that uses HMRC’s Check Employment Status for Tax tool (CEST) to assess IR35 status. 

Recently conducted Qdos research shows that only a slim minority of contractors would agree to work on a project if it became apparent that the government’s IR35 tool was relied upon. The remaining 77% reported being either unsure (43%) or would choose not to (34%) work with companies that put their faith in HMRC’s controversial IR35 technology. 

Since its hasty arrival in 2017 just in time for the introduction of reform in the public sector, CEST has divided opinion. With concerns over its reliability, the government’s much-maligned IR35 tool has failed to convince contractors, the vast majority of credible IR35 experts and has arguably played a telling role in many incorrect IR35 status determinations. 

On the one hand, the government says its IR35 tool is up to the task of deciding a contractor’s employment status correctly. On the other hand, contractors, IR35 experts, an increasing number of businesses and, believe it or not, the House of Lords itself, have very little faith in this technology. 

There are plenty of reasons why CEST was described as “not fit for purpose” by the Lords, who also said it “falls well short of what is required” in their damning report into IR35. From its inflexible logic to its failure to provide answers based on all aspects of IR35 case law, the argument that CEST poses a risk to the businesses that rely on it is well known. 

But now, with only a handful of months left until the reform lands, contractors have had their say. Whilst it’s well known that few independent professionals trust CEST, that less than a quarter would work with businesses using the tool may dissuade firms from using this flawed technology. 

To find out the reasons why Qdos, as an IR35 specialist who has defended over 1,600 IR35 enquiries and carries out over 2,000 IR35 status reviews monthly, advises against the use of CEST, please click here.

Qdos is supporting over 2,200 businesses, helping them navigate changes to the off-payroll working rules. The Qdos Status Review facility provides a range of expert IR35 solutions, including IR35 status reviews and IR35 insurance, to allow businesses to compliantly place and engage contract workers. For more information, please email info@qdoscommercialservices.com or phone 0116 478 3390.

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