New IR35 Forum minutes show CEST on the mend

Some of the changes to CEST that contractors and their contractual partners may have to contend with can be gleaned from the new minutes of the latest IR35 Forum meeting.

At the August 31st meeting, HMRC said that “information” about Mutuality of Obligation might be included on CEST’s online landing page, for people to read before using it.

The Revenue might also “redraft” its MOO position paper, to “include additional material,” not dissimilar to its admission last week that it needs to “refine” IR35 reform as a whole.

'Differences remain'

Both “possible options” expressed at the meeting represent a climbdown by HMRC, but it seems as if it is only exploring them for appearance’s sake, or to appease forum members.

In fact, despite it considering the two post-facto MOO explanations, the minutes observe that “differences remain in the interpretation of MOO between HMRC and some stakeholders.”

The use of the word ‘some’ suggests officials are trying to minimise the appearance of a rift between forum members and HMRC, but actually no member has backed HMRC’s position.

Wording about CEST in the government’s response last week to the private sector IR35 reform consultation also tries to downplay differences between HMRC and industry leaders.


Stakeholders, the response says, “expressed concern” about CEST, whereas actually they called it ‘blunt,’ ‘unhelpful,’ and ‘potentially unlawful.’ Others said, and still say, it should be abandoned entirely.

In receipt of those charges, Treasury minister Mel Stride MP said this month that “enhancements” to CEST would be made, and “extensive guidance” to users provided.

The minutes of the meeting -- held back in August, suggest those enhancements could now be waiting in the wings: “Specific guidance to help people complete CEST would be useful.

“One element being guidance on what information needs to be collected in advance in order to answer the questions,” the minutes say.

“The second [element being] to provide further commentary to help with completion of the questions covering what they mean and their significance.”

'In business on own account'

Forum members also want CEST to factor-in PSCs who have a range of engagements which suggest being in business on one's own account, amid concern the tool fails to currently.

As acknowledged by the government response this month, there is an additional demand that CEST should reflect the outcome of relevant litigation brought since the tool’s introduction.

But these two big changes, plus the government’s lofty aim of ‘ensuring CEST reflects the more diverse private sector,’ will put the strain a tool that officials want to keep simple.

The August minutes state: “HMRC commented that there needs to be a balance between a tool that is simple and straightforward with a relatively small number of questions, suitable for the majority of customers, and attempting to cover every eventuality.”

The latter, audacious ambition to ‘cover every eventuality’ indicates that the ‘Julie de Brito’ approach is no longer in play at HMRC. As its senior policy adviser, she has said of CEST:

“We are not going to build something that covers everyone. And there will be cases at the margin, but if we can build what we want to, it will cover a majority and that is the best we can hope for.”

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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