Why the new CEST update by HMRC doesn’t go far enough
The taxman’s quietly-made revisions don’t fix the flaws of an IR35 status tool built almost a decade ago. An update…
Beyond cosmetic? Or nothing more than just a face-lift? Status advisers clash over the officially ‘more accessible’ Check Employment Status for Tax tool (CEST).
A new CEST, of sorts, doesn’t mean contractors with a recent ‘outside IR35’ result from it now need to rerun the tool.
His Majesty’s Revenue & Customs (HMRC) issued this clarification yesterday to Kingsbridge.
The clarification to the IR35 insurer is helpful, as while the changes to the IR35 tool were released on time, they look more involved than HMRC let on.
‘Make CEST easier for users’
Before the update to CEST (made at 14.00 on April 30th), all HMRC said was that it was “revising” the tool to “make it easier for users” to navigate.
Also, ahead of updating CEST, HMRC said it would offer “revised guidance” to help taxpayers with answering “revised questions.”
But when it went live, the CEST update was actually six-fold, observes Kingsbridge IR35 Project Manager Ryan Dawson.
‘Very little about CEST is fundamentally different’
He says: “‘New’ CEST has new pre-requisite questions, changes to questions, language tweaks, new links, updated guidance, and a ‘CEST logic’ spreadsheet.
“So there’s more than was cued up. But a ‘lot of noise signifying nothing’ is relevant here, as despite the six changes very little is different, fundamentally.”
Pressed about being a bit unmoved, Dawson said he’d run CEST on a mock ‘outside IR35’ assignment and found only “minor” differences.
And it still came back as outside IR35.
‘Underlying technical principles of CEST unchanged’
Indeed, “none of the updates to CEST were to the underlying technical principles”, says Caroline Harwood, Head of Employment Tax at BDO.
Nevertheless, in HMRC’s view, “the improvements will help those completing the [online] form to have a more considered approach”, Harwood says.
HMRC said in online ‘update’ notes for CEST that it has inserted “useful links” to provide “related guidance”, and made changes to “simplify the language”.
‘Face lift, not an overhaul procedure to make this free IR35 tool robust’
But it all still represents only a “functionality facelift”, says Kingsbridge’s Mr Dawson – “far short of the full overhaul procedure needed to make it robust”.
He adds: “Kingsbridge’s stance, like many advisers in the status space, is clear.
“CEST is only the government’s free-to-use IR35 status tool. It can guide you towards making a decision on status, but it should not be used in isolation.
“If possible, seek the advice of one of the many great advisers in this space or use a more comprehensive status tool, alongside CEST at the very least.
“They will often have far better technology and ability to record and maintain the narrative and decisions behind making a decision on status.”
‘Navigating the brand-new CEST tool effectively’
The upside of CEST functionality changing (not CEST’s fundamentals changing) is that a new, three-figure course on “navigating the brand-new CEST tool effectively” might not be necessary.
Being marketed to end clients and recruitment agencies since the April 30th changes, the course is billed as a response to an “important” update “likely to affect your contractor and freelancer workforce management”.
The other upside of CEST seemingly being (essentially) the same is that contractors who received an ‘outside IR35’ result from it before Monday don’t need to retest.
Tax officials briefing Kingsbridge reasoned that as the tool’s decision-making logic has not altered, outcomes pre-and-post-update will be consistent.
HMRC’s explained that, provided the answers given before the update were correct, the tax authority will stand by an ‘outside’ result, assuming the role has not changed.
Therefore, there is no need to rerun CEST – an ‘outside IR35’ outcome will still be ‘outside,’ just as an ‘inside IR35’ result will also (theoretically) still be ‘inside’.
‘CEST changes have already triggered ESM guidance changes’
But Rebecca Seeley Harris, an off-payroll adviser, implied it’s probably worth double-checking, as she believes the changes to CEST aren’t just cosmetic.
“The new CEST update is definitely more than a facelift”, the adviser, of ReLegal Consulting told Kingsbridge.
“There are now changes to the ESM guidance as a result, on, for example, personal services and financial risk.”
The CEST Explained author conceded, however, that the impetus is on the “customer journey” and “making the tool more user-friendly”.
‘HMRC missed the opportunity to clear up vehicle cost question confusion’
But more emphasis should have been placed by HMRC on making its questions less ambiguous, according to Ms Harwood of BDO.
“These changes [to CEST] are welcomed but…unfortunately, HMRC have missed the opportunity to clarify the ‘vehicle cost question’ which is easily misunderstood”, she said.
‘CEST tool logic document’
Ed Paul, Employment Tax Manager at Colt Technology Services, offered some guidance to reduce misunderstanding and complexity when using CEST.
“[To achieve] simplicity, I would recommend viewing the [newly released] Check Employment Status for Tax tool logic [document].
“It sets out all the possible responses to the new CEST questions. And how it impacts assessments.”
Paul says that while HMRC has made “a number of changes” to the IR35 tool, its “underlying logic remains the same”.
‘CEST update is a leap sideways, not forwards’
Kingsbridge’s Mr Dawson reflected: “It’s a real shame that HMRC haven’t done more in this update, as I’m sure we as IR35 insurers and the contractor industry would love to say HMRC has made a leap forward rather than a leap sideways.
“If it were forwards, then it wouldn’t be the case – as HMRC explained to us – that there is no need to rerun previous assessments put out by the tool prior to the update.
“Among other things, that means that, unfortunately, if you didn’t trust CEST yesterday, nothing in this update will convince you to trust it today.”
‘More accessible’
Speaking on Thursday May 1st 2025, an HMRC spokesperson told the Kingsbridge Blog: “We’ve listened to feedback from customers and advisers and updated the tool’s questions to make them more accessible.
“These changes do not affect how the tool determines if a worker is self-employed or employed.”
How Kingsbridge can help
Navigating IR35 legislation and ensuring compliance can be challenging for contractors and businesses alike. As mentioned above, the CEST tool shouldn’t be used in isolation and we’d always recommend seeking professional advice when assessing your IR35 status.
At Kingsbridge we offer tailored support, including expert guidance on IR35 status assessments, compliance strategies, and risk mitigation. Our team is dedicated to helping contractors and businesses understand and adapt to the evolving tax landscape. We also offer a range of flexible business insurance options to support contractors, including Professional Indemnity, Public Liability, and Employers’ Liability cover, as well as add-ons like Cyber Insurance and Director and Officer’s Liability.
To find out more, get a quote or contact us today.
Simon Moore, Managing Director at Moore News Ltd
Simon Moore is a journalist with NCTJ-approved journalism training, who has worked inside the newsrooms of local, consumer and national media titles.
He today writes news and features for trade publications specialising in freelancing, small business and the self-employed. Simon’s articles have been linked to by The Daily Telegraph and the biggest newspaper website in the world, MailOnline. He was appointed to be a judge at IPSE Freelancer’s Awards 2023.
