Updates to HMRC’s ‘Check Employment Status for Tax’ (CEST) Tool

Anyone familiar with the complexities of employment status will likely know about HMRC’s free tool, Check Employment Status for Tax (CEST). For the past six years, the tool has remained largely unchanged, but HMRC has recently made some updates, which we’ll outline below.

Mutuality of Obligation (MOO)

One long-standing criticism of the CEST tool has been its treatment of mutuality of obligation (MOO)—the concept that both employer and worker have ongoing obligations to each other.

Previously, the tool assumed MOO was always present, without asking any questions about it. However, the recent PGMOL case in the Supreme Court clarified that MOO can exist even if obligations only apply while the individual is actively working.

In response, the updated CEST now includes a new question on MOO. If the answer suggests there’s no contract in place, the tool will display the message: “You need a contract to use the tool.” In practice, a contract will almost always exist as the term contract is widely drawn and can be written, verbal or implied. Assuming that this is the case, it is important to answer this question as ‘yes.’

Other updates

Overall, the updates are limited. The core programming behind CEST hasn’t changed, and the tool still delivers the same employment status outcomes as before. The main improvements are:

• Slightly simplified language
• Additional guidance and links

While HMRC has updated its guidance to reflect recent case law, it hasn’t introduced meaningful new questions to capture the key legal developments. This means businesses must still take reasonable care when making status determinations. Failing to do so could result in penalties if HMRC later disagrees with a decision.

Our Support

It’s important to remember that CEST is just one part of the overall picture when determining employment status.

At PSTAX, we have extensive experience helping clients assess the correct employment status for their workers. Subscribers to the PSTAX Tax Club benefit from unlimited access to our Employment Tax Helpline. We also offer tailored reviews of individual worker status where needed.

Alongside our expert helpline and we offer regular training courses that are especially relevant in light of HMRC’s December 2023 guidance, which made various recommendations on staff training.  Our next course is on Wednesday 21 May, and these updates will be covered. You can book a place via the button below:

Off-Payroll Working / Employment Status (IR35) Training | PSTAX

In addition, we also offer our two-part e-learning course, which allows learners to train at their own pace, making it a convenient and cost-effective option. Recently refreshed to appeal to lots of different learning styles, the e-learning is our most affordable Off-Payroll Working training solution. Providing the hiring team with the right level of training for their role is an effective way of demonstrating reasonable care to HMRC. For more information, please contact Mae Kennedy via mae.kennedy@pstax.co.uk.

OPW/IR35 E-Learning