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Impact of HMRC’s updated check employment status for tax tool

13 November 2023 / Penny Simmons
Issue: 4913 / Categories: Comment & Analysis , employment status , IR35 , Employees
Time to wake up

Key points

  • HMRC has released a new version of its check employment status for tax (CEST) tool.
  • No substantial changes have been made to how the tool generates a response and which factors it places more reliance on when making determinations.
  • In complex cases businesses should use CEST in combination with exercising judgment.
  • Businesses must manage IR35 risks to avoid penalties.

When a business engages an individual to provide services otherwise than as an employee the business needs to determine whether the individual can be paid ‘off-payroll’ on a self-employed basis. Notwithstanding that they may not be an employee under employment law an individual may still need to be taxed as an employee on income they receive from the business.

HMRC’s check employment status for tax (CEST) tool is commonly used to determine an individual’s employment status for tax purposes. HMRC recently launched a new version...

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