UK: Extension Of IR35 To The Private Sector, Part 14 – Is The CEST Test Best?

Last Updated: 26 July 2019
Article by David Whincup

Here is another question from our IR35 webinar the other week.

Given what I have read about CEST supposedly being rigged in favour of HMRC, is it worth using for my PSC assessments?

If you google HMRC’s Checking Employment Status for Tax (CEST) tool, right back at you will come a substantial number of articles criticising different aspects of it. It is biased, incomplete, unreliable, they say. It contains no questions about mutuality of obligation even though that is a fundamental indicator of status for employment rights purposes. It is unable to give a view at all in about 1 in 6 cases and its questions seek black or white answers to which the real facts are rarely susceptible. There are suggestions that CEST’s development took place in artificial workshop surroundings only, and that this is why in some cases it reaches conclusions different from the judges who heard the facts in real life. A freedom of information request has apparently confirmed that CEST was never even formally assessed against the government’s own Digital Services Standards as used to determine whether or not a service is fit for public use.

And then, say the commentators indignantly, HMRC will feel free to disregard the product of its own tool in any case if it can argue that the inputs were either inaccurate or contrived. So, frankly, is it worth doing at all?

We think it is. If you get an outside-IR35 answer from the best answers you can give, you have the closest you will get to a guarantee that that particular PSC arrangement is not caught. So long as you guard against later laxity and mission-creep in how the contract is actually operated in practice, you should be OK.

So far so good. But what if CEST dings your answers as falling inside IR35? Are you stuck with that?

No, for at least a couple of reasons. First, so far as we are aware HMRC will not know of “dummy-runs” on CEST. Therefore it will not be able to see either your initial answers or their development as you work towards an arrangement which will both work in practice for you and satisfy CEST. Second, it remains open to you to argue with HMRC that there are subtleties and shades of grey in your PSC arrangements which CEST cannot cope with, and which should tip the balance the other way when considered in proper detail. A number of commentators say that CEST sets the bar too high in the questions that it asks, and that those questions are too vague. The questions about “control”, for example, require the end user to confirm that it “cannot provide input as to how work is carried out”. But “provide input” might cover everything from an occasional suggestion to a regular instruction, and those should lead to very different outcomes. That is an argument too far for CEST but might well be accepted by HMRC or a tax tribunal.

Alternatively, I suppose that you could think about the online tests created by a number of private sector suppliers, including some of the Big Four accountants. These are said to allow for a more forensic analysis of the relevant circumstances in any given PSC arrangement. However, in truth these can be no more than guidance and an opportunity for some further tweakery around the edges of your contract. There is no sign that private sector tools of this nature will be regarded even as persuasive, let alone binding, by HMRC (and without HMRC having access to all the algorithms behind those tools, that is only to be expected).

Analysis of the inner workings of the CEST tool has led to a number of articles teetering precariously on the line between telling you how to pass it on the one hand and advising you not to game it on the other. The main routes through to a green light are those we have covered in earlier posts in this series – substitution, control and financial liability. As end-user, you still have nine months in which to get your poultry all lined up in these respects. That might mean reshaping your existing and future PSC arrangements (both on paper and in practice) to maximise your case under each of those heads. Alternatively, it might mean recognising now that the degree of distance which those criteria require you to insert between your business and a contractor is incompatible with your branding, quality control or client service imperatives, and therefore that you are better off biting the IR35 bullet now.

CEST is not a definitive answer to that question either way, but you will never be criticised within or outside the business for taking its inputs into account in that decision.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions