The Chartered Institute of Taxation (CIOT) has called on the Government to make improvements to its online assessment tool for off-payroll working, warning that the new rules won’t operate effectively without it.
The Check Employment Status for Tax (CEST) tool has been developed by HM Revenue & Customs (HMRC) to help employers identify those contractors and consultants caught within the IR35 rules.
However, the CIOT said that the system needed to be significantly improved if the rollout of the off-payroll working rules to the private sector is not to lead to uncertainty and protracted disputes over tax status between businesses and workers.
HMRC have recently lost a number of tribunal cases on off-payroll working rules in the public sector, including the high-profile cases of Lorraine Kelly and Kaye Adams, and the tax authority has been forced to admit that the CEST tool only provides an accurate determination in 85 per cent of cases.
The CIOT has made a number of representations on the behalf of its members in HMRC’s ongoing consultation on how the off-payroll working rules will apply from April 6 2020, when the plan is to extend them to all sectors (except small businesses).
Launched in April 2017, the CEST tool was designed to help businesses and workers decide the employment status of their engagement, but the CIOT says that it does not factor in all the criteria established by case law before its algorithms reach a decision on whether IR35 applies.