Taxpayer usage of HMRC’s IR35 tool, CEST, plummets

‘Horrific examples’ of taxpayers ‘gaming’ Check Employment Status for Tax (CEST) are being linked to a 73% drop in engagement. 

New CEST data from HMRC reveals plummeting usage of the government’s IR35 tool.   

Following a peak of 806,432 usages in 2021/2022, only 138,758 usages of Check Employment Status for Tax were recorded by HMRC in 2023/24.   

‘Unsurprisingly, CEST tool usage has fallen’ 

Qdos calls the 73% drop in CEST use, from the tax year of private sector IR35 reform to the latest tax year for which data is available, “quite the discovery”.   

An adviser with “IR35” in their job title, but who declined to be named, said the opposite to Kingsbridge – “I don’t see what the big deal is about”.  

A third IR35 expert took to LinkedIn after HMRC released the data under freedom of information rules and preferred to take the middle ground.  

“It’s not surprising that the usage [of HMRC’s Check Employment Status for Tax tool] has fallen”, said the expert, Rebecca Seeley Harris.   

‘CEST used to obtain the IR35 outcome that the user wants’ 

More consensus exists about why CEST usage has reduced so sharply.   

Contract recruitment specialist Matt Collingwood, who yesterday recalled playing with CEST in the first few days of its release in March 2017, reflected: 

“Eight years on, most CEST users know what to expect. They’re familiar with the questions and can use it to obtain the IR35 outcome they’re aiming for.”  

‘Secure a Status Determination Statement with a single use of CEST’ 

The boss of VIQU, Mr Collingwood continued to Kingsbridge: “I recall sitting with a client in CEST’s early days; we must’ve run it from five locations for one [Personal Service Company].  

“Now, in 2025-26, that same client can secure a Status Determination Statement in a matter of minutes – with just a single use of CEST.”  

The full CEST dataset, released to former off-payroll working (OPW) lobbyist Dave Chaplin and reproduced below, appears to support a ‘one and done’ approach being taken to CEST. 

‘CEST now returns “outside IR35” 64% of the time’ 

According to the HMRC figures for 2023/24, CEST returns an ‘outside IR35’ result almost two-thirds of the time (64%), up from 50% in 2020/21. 

Source: HMRC official figures, reportedly released to former OPW lobbyist Dave Chaplin. 

‘Horrific examples of staff gaming CEST’ 

The Law Place, a legal firm specialising in IR35, implies that it doesn’t need official data to tell it that CEST has become a tool dogged by a ‘single use case’.  

“We’ve seen horrific examples of clients training employees to game CEST”, the legal firm’s Founder Martyn Valentine told Kingsbridge.   

“[And that ‘gaming’ has led to] the use of potentially fraudulent role-based Status Determination Statements.”  

‘Reliance on generic Status Determination Statements (SDSs)’ 

Kingsbridge’s Head of Growth Sam Steel sounds less sure that CEST users ‘rigging’ the IR35 status tool for their own ends accounts for its big drop off.  

He believes “IR35 issues rarely come down to bad intent”, yet he also admits that only “recently” they found a “big-name” relying on “generic SDSs”.  

However, it’s not misunderstanding or manipulation – yet it could be both, according to a diagnosis of the CEST user drop-off by Crowe UK’s James Reardon. 

‘Few factors potentially at play’ 

“There are a few factors potentially at play…[that explain this] substantial [CEST userbase reduction]”, Mr Reardon, Crowe’s Head of Employment Tax began in a statement to Kingsbridge. 

“The first…could well be that there is a drop in off-payroll working.  

“As companies decide that the off-payroll working rules are too complicated, and the risks too high, blanket ‘inside IR35’ policies increase. 

“The second reason for [taxpayer] disengagement [with CEST] could be the number of indeterminate assessments.   

“In 2023-24, one in five assessments on CEST ended with no [determinative] result…[serving to] undermine the credibility of the tool. 

“[In addition], any company with a large contingent workforce, or complex cases…will outgrow CEST.” 

‘Businesses lost confidence CEST can be central to IR35 testing’ 

Reardon added a fourth reason why CEST engagement has plummeted by 73%, and it’s “probably the most important factor of them all”. 

He characterised this fourth factor as a cumulative “loss in confidence from businesses that CEST can be central to their [IR35 testing] process.” 

“HMRC itself shies away from making CEST mandatory. Or legally binding”, Reardon says.  

“And it has even been ignored at tribunal when the outcome conflicted with evidence.”  

‘CEST suffers from expectation bias’ 

The Law Place said: “[CEST] output does not explain why the ‘terms on which the services are provided’ - [as] section 61M(3) of ITEPA 2003 [puts it] – supports the conclusion. 

“Nor does [CEST] consider whether the contractor has been engaged to supply an individual to undertake a role or deliver a project.  

“Further, the [CEST] output does not refer to the contractual terms in the contract between the contractor and the employment business or client. 

“And worst of all, expectation bias means that the user will often get the result they are looking for.”  

So, CEST exists in a “legal vacuum”, added Mr Valentine, and “the fact that HMRC claims they will stand by the result is not based on law”. 

‘Much better off using CEST as part of your IR35 determination process’ 

Re Legal Consulting says CEST is being “unfairly discredited”. 

Speaking without sight of Valentine’s comments but in wake of the HMRC CEST user data showing a 73% decline, Re Legal’s Founder, Ms Seeley Harris, said: 

“HMRC are winning case law hands down at the tribunal. And CEST reflects this.  

“So, you are much better off using CEST as part of your process, even if it is in addition to using another tool or your own. It’s free and gives HMRC’s point of view.” 

‘HMRC figures indicate low confidence in CEST’ 

Last night, Ryan Dawson reasoned: “What these figures at least strongly indicate is that confidence in CEST is quite low. 

“We’ve seen that low level of confidence in HMRC’s IR35 tool among contractors and hirers that we speak to. 

“So, anecdotally and now statistically too, taxpayers – whether they are businesses, agencies or workers – appear to be moving away from CEST and seeking alternative ways to determine IR35 status.” 

‘Check Employment Status for Tax tool poses a risk, despite updates’ 

Kingsbridge’s IR35 Project Manager, Mr Dawson continued: “Our view as an insurer against HMRC liabilities under the IR35 legislation is that, when used in isolation, the Check Employment Status for Tax tool poses a risk. 

“Not only that, but it’s tricky not to see this ‘CEST hiatus’ – at best – being at odds with the support, functionality, audit ability, tracking, and management capabilities of other IR35 status tools. Our own and others too.  

“That’s not to say HMRC hasn’t made efforts to improve CEST over its lifetime, notably in November 2019, in October 2023, in February 2024 and in May 2025. 

“But whether you’re a tax official or IT contractor who worked for HMRC on those efforts, these CEST figures make clear that those efforts are still falling short.” 

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