As the planned changes to who determines IR35 status are fast approaching, contractors would be well advised to review their contracts on HMRC’s updated CEST (Check Employment Status for Tax) tool. Having provided answers to questions regarding substitution, control and nature of the work, the updated tool will give HMRC’s view of the workers employment status.
End clients are also able to use this tool to assess their workforce in advance of April 2020 . Judging by conversations we are having with our contractor clients, in many cases this process is happening now. But what if you disagree with the engager’s assessment?
Unlike the public sector rules that have been in place since 2017, the draft legislation for the private sector includes a “Client-led status disagreement process” – effectively an appeals process. Once the client has been informed a contractor disagrees with the decision, they have 45 days to respond. If they fail to do this, the client will be liable for all employment taxes.
If, on consideration, the original assessment was correct, the client must inform the contractor of this and state the reasons. However, if they reach a different conclusion, the client must give the contractor a new status determination statement and state that the previous one is withdrawn.
As long as the information entered is accurate, HMRC have stated they will stand by the results of the CEST tool, so keeping a copy is recommended. We can help with IR35 insurance for the costs of professional representation, if your status is challenged by HMRC later on, and contract reviews if a more in depth opinion is needed.