HMRC makes 'minor' yet 'helpful' changes to CEST

A new Mutuality of Obligation (MoO) question is probably HMRC’s showpiece of several new changes to CEST.

The “Help” text within the “Financial Risk” questions has been changed, as has CEST’s landing page, introduction, and disclaimer.

Check Employment Status for Tax (CEST) also now features “lots more links to [taxpayer] guidance,” as Mark Seadon, of professional services firm BDO put it.

‘Helpful’

HMRC inserting these new links is “helpful as…some questions weren’t always clear,” says Seadon, the firm’s employment services director.

But all of the changes including the MoO question don’t alter CEST’s thinking, which is now outlined on a new CEST “tool logic” spreadsheet.

Medical recruiter LocumBell took to LinkedIn about the new Mutuality probe, describing it as a “new question around contracts.”

‘Gateway question’

However, “Do you have, or will there be, a contract in place?” is more accurately a new “gateway question” on CEST, says ReLegal Consulting.

Indeed, for contractors, it now follows CEST’s opener “Who are you?”, and a “Yes” reply to “Do you…?” will “not impact your determination,” HMRC claims.

“There was a lot of criticism regarding HMRC’s view of MoO and it not being included in the tool, so…[this will hopefully] clarify [things],” says ReLegal Consulting founder Rebecca Seeley Harris.

‘PGMOL’

Users of CEST who reply “No” to the new Mutuality question are unable to proceed to the next question.

In a newly created ESM11036, the origin of the new MoO question is explained by the tax office:

“[HMRC] v Professional Game Match Officials Ltd reaffirmed that the basic requirements to determine whether there is a contract in existence at all are;  

“That the engager must be obliged to pay a wage or other remuneration, and that the worker must be obliged to provide his or her own work or skill.”

‘CEST remains too blunt an instrument for IR35 status testing’

Seb Maley, chief executive of Qdos, guardedly welcomes any changes to CEST that “help users answer the questions”.

He believes the tool “needs revising” even further, as CEST still constitutes a “blunt instrument” -- too blunt, he says, to rely on in isolation.

“Very little has changed,” said Maley, bottom-lining the CEST ‘changes.’

“Nothing…[was introduced by HMRC on April 30th that affects] the logic around how it assesses employment status.”

Last week, HMRC updated its Employment Status Manual to acknowledge the CEST refresh.

‘No change to underlying technical principles’

And in effect, those updates confirm Mr Maley’s assessment.

“There is no change to underlying technical principles,” HMRC wrote in ESM11000.

Also of Qdos, Nicole Slowey on Friday said that the IR35 contract review firm had now had time to digest what constituted “minor updates” to CEST.

‘No material change to IR35 decision-making’

“There’s very little to report back on,” Slowey said.

“Slight tweaks to its questions. But in essence, there’s no material change to IR35 decision-making for those who use it.”

In response to questions from ContractorUK, HMRC confirmed that a range of user experience improvements have now been made to CEST.

The tax department clarified that it had not created a new version of its IR35 status testing tool.

‘CEST question about similar work for other clients still needs tweaking’

And HMRC doesn’t necessarily need to create a new version, but it should have plugged two or three holes, BDO’s Mr Seadon hinted.

“The 'Provide Vehicle' question could do with more alarms on it,” he began in a social media post.

“Despite [HMRC] saying, ‘This does not include commuting or personal vehicle costs,’ this [CEST question] is often misunderstood.

“[And I] still think the question about doing similar work for other clients should have a ‘Don't Know’ possible answer.”

‘Inside IR35 -- just to be safe’

A downbeat test manager, Neil Chapman, wonders if changes to CEST, whether they constitute tweaks or big updates, are futile.

Referring to either, Chapman said he fears that end-users will “still decree every contractor role ‘inside IR35’ -- just to be safe.”

But BDO implies even April 30th’s seemingly minor refresh of CEST is worth revisiting prior results where they are on the margins.

‘Revisit your CEST result if it was grey’

Seadon reflected after HMRC’s April 30th update to CEST:

“Highly recommend people revisit CEST -- and associated guidance -- particularly on those cases where you may have felt the previous finding was more ‘grey.’

“In addition, remember, this is HMRC’s tool and therefore demonstrates very well their thinking. It is therefore valuable.”

Sara Burton, a Salesforce training consultant, has already seen differences in CEST results.

‘Puzzle’

“Coincidentally [on April 30th], I was building some training [modules] on IR35 and running some examples," Burton began.

“I couldn’t work out why the afternoon one [had a different IR35 determination] from the morning one.I think this [update] solves that puzzle!”

To other CEST users, there’s already disappointment that the HMRC tool remains indecisive, even in ‘typical’ contractor engagements.

‘Unable to determine’

One CEST user said, following the update at 1400 on 30.04.25: “I still managed to receive an ‘unable to determine’ outcome on my first play with CEST since the changes – albeit with what I would consider to be a reasonably common potential arrangement.”

LocumBell co-founder Shakeela Varachia advises: “[With] ‘unable to determine’ results from CEST, remember it isn’t the end of the story.

“That’s not a final decision. You’re still required to assess and document the IR35 status to meet HMRC’s ‘reasonable care’ obligations. We’ve created a plain-English guide specifically for healthcare locum providers.”