Tax | BBC presenters contract case 'nail in the coffin' for CEST tool

BBC presenters contract case 'nail in the coffin' for CEST tool

IPSE has criticised HMRC’s CEST (Check Employment Status for Tax) tool, describing it as “not fit for purpose” following claims against the BBC revealed problems with its calculations.

The tool, launched in 2017, was designed to help employers and workers decide if they should be classed as employed or self-employed for tax purposes. According to the BBC representatives, the presenters’ self-employed status was deemed legitimate before the introduction of CEST, but the tool found 95% of them should instead be considered employees.

This week a meeting of the Public Accounts Committee (PAC) was held to discuss to discuss claims that the BBC had forced its presenters to form Personal Service Companies to receive their pay. At the meeting, representatives of the broadcaster repeatedly criticised the performance and swift introduction of the CEST tool.

BBC Director General Lord Hall said: “From 2017 onwards, we were surprised by the way the outcomes of the tests that we had been applying perfectly legitimately and properly before were suddenly changed by CEST.”

He warned: “HMRC should be thinking very hard about the difficulties created by rushing into something which was more global in nature, and which we still haven’t worked through the consequences of now.”

IPSE’s Policy Development Manager Jordan Marshall said the association had been warning about problems with the CEST tool for some time, and these revelations are “just another nail in its coffin”.

“The CEST tool massively oversimplifies hugely complex tax legislation to come out with clearly incorrect judgements – which have been overruled by several recent employment tribunal cases,” he explained. “CEST is simply not an effective tool for judging the employment status of the UK’s workforce.

“Especially when the government is pushing through drastic changes to self-employed IR35 tax law, it cannot and must not rely on such a cumbersome, blunt-edged tool to determine who is and who is not self-employed in the UK.

“The CEST tool should be reviewed and if it cannot be made fit-for-purpose, should be scrapped altogether.”

Research from ContractorCalculator found in 2018 that the CEST tool only had a 58% success rate at working out the correct employment status and the reasons why for users. In 29% of cases, it gave a totally incorrect answer and in others it gave the correct answer, but outlined the wrong reasons why.

“HMRC has a duty of care to ensure that the public pays the correct amount of tax,” Dave Chaplin, CEO and founder of ContractorCalculator, said. “CEST clearly doesn’t provide this and is designed to deliver the maximum amount of tax by falsely encouraging firms to overtax their workers.

“HMRC has no authority to create digital tools which override the law. Its actions here are a complete abuse of power.”

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