HMRC confirms 'CEST 2.0' now up and running

HMRC has confirmed to ContractorUK that ‘CEST 2.0’ is now live.

An HMRC spokesperson said: “We successfully moved our CEST tool to a new platform on Monday 2nd October.”  

ContractorUK sought confirmation that the tool has now moved to OCELOT, among other changes, after contractors reported no visible signs of CEST being updated.


The government’s CEST “update” notes omit the migration, despite recording smaller tweaks like, in March 2017, “Added a link to the off-payroll working in the public sector guidance.”

But the Revenue yesterday confirmed that the new technology behind CEST is now live, complete with new features hoped to boost customer interaction with the tool.

For example, designed to increase useability, ESM guidance has been embedded into CEST, saving users who need help from having to find and open another web page in their browser.

Such improvements for users -- also not flagged up in CEST’s official update notes -- are things that CEST users will only notice when they run the tool.

'New CEST platform without the necessary contents'

This muted launch for CEST 2.0 appears to mirror how off-payroll advisers feel about the upgrade to the only IR35-testing device which HMRC says it will honour the results of (potentially).

“While we welcome amendments to CEST…this phase one of CEST 2.0 feels like a new platform base without the necessary contents behind it,” says IR35 advisory Project Scopes.

The advisory’s Patrick Joyce continued to ContractorUK: “So the slight changes should help with the format and process. But the real [key problems and] points are yet to be addressed.

“And for real change, the code behind CEST requires revamping, to take into consideration real scenarios, and actual contractor working practices…[if the tool is ever to] display reality.”

'Only one part of the picture'

Working practice is “only one part of the picture” cautions Markel, which warns that “many” end-users get a desirable CEST result, only to fall down on poorly constructed contracts.

“HMRC guidance [in phase two should therefore] make it abundantly clear to all users of CEST that they must ensure their written contracts are fully reflective of working practices and contain all the necessary provisions which case law has identified as necessary,” says Markel’s David Harmer.

“[So] while this [initial phase of improvements to CEST] seems like a step in the right direction, we hope further developments will be made swiftly.”

'Many rely on CEST'

Pressed about what those further developments should be, Harmer, an associate director at Markel, said: “It seems many end-clients rely on CEST to produce their Status Determination Statements.

“[Yet] it is difficult to see how any tool which does not include mutuality of obligations -- which was confirmed by the House of Lords in ‘Carmichael’ as fundamental -- can produce an accurate and reliable result. 

“We would hope one such improvement [to CEST 2.0] would be inclusion of mutuality of obligations -- as well as a change in interpretation by HMRC.”

ReLegal Consulting advised on Monday that a change in interpretation of MOO by HMRC (which could in turn be included in CEST), might be forced by a verdict in favour of the taxpayer in ‘PGMOL.’

'CEST can't ever produce a valid SDS'

But another legal advisory is signalling that future ‘improvements’ to CEST are, for end-users who are placing reliance on the tool, akin to rearranging deck chairs on the Titanic.

In contrast to both Markel and Project Scopes which both described CEST 2.0 as a “step in the right direction,” the advisory, The Law Place said: “CEST cannot ever produce a valid status determination statement, since it does not explain why IR35 applies or not with reference to the ‘terms on which the services are provided’.”

The advisory’s boss Martyn Valentine added in a statement to ContractorUK: “The use of CEST cannot provide a defence under section 61NA(1)(b) where a client fails to explain why the condition in section 61M(1)(d)…is not met. The output from CEST often bears no relation to the contractual terms… [and] clients often rely on any document in the supply chain to keep ‘essential’ contractors happy -- and have missed the memo on a tariff of three-to-17 years for tax fraud.”

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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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