HMRC Updates CEST Tool Guidance as of 30th April 2025

The Check Employment Status Tool supplied on line by HMRC has been unchanged since 2017 when the current body of regulation was brought into play for the ‘benefit’ of the public sector. The private and third sectors followed in later years.

A long awaited update has now been implemented to largely underwhelming response from the industry.

Why so?

The logic of the tool, which has been questioned for all its life has remained unchanged.

What has changed is the wording of the supporting explanatory documentation. It is regarded as simpler and easier to understand.

Having said this, HMRC still recognises that independent advice should still be sought, which clearly reinforces the labyrinthine nature of the regulations and the attendant caselaw.

HMRC continues to confirm it will stand by the tool outcomes BUT… “will stand by the determination produced by the tool provided the information is accurate and it is used in accordance with our guidance.”

In using this tool, please remember that it is HMRC’s view and interpretation of the relevant case law and precedent. This is open to interpretation even now and is regularly updated.

With this in mind, here are some examples of how things have adjusted with the outcome of the PGMOL case (Professional Game Match Officials Ltd v HMRC). It is condensed from an article in Freelance Informer as the source, interviewing Rebecca Seeley Harris who is an independent employment status expert:

Your contract points towards employment for tax purposes if you have:

1.       An obligation to accept all work

2.       No genuine right of substitution:

3.       The client has detailed control over how, when, and where you work

4.       To integrate into the company’s structure and behave as an employee

5.       To be subject to a detailed disciplinary process

6.       To use the client’s equipment and resources

7.       To receive regular and fixed payments (not tied to specific deliverables)

8.       To receive benefits in keeping with being an employee

9.       A contract or agreement in place as HMRC regards this as the starting point for any assessment. It possesses a simple view – if your provide a service and get paid for that, this is a contract and there is a mutuality of obligation. The rest is to determine how tying that contract is so you can be regarded as an employee for tax purposes.

No single factor is usually decisive (unless you are stating that you are an officer where the office has a life before and after you). HMRC says it takes a holistic view of the working relationship, both the written contract and working practice.

Harris concludes: “The PGMOL case shows that even if a contract is labelled as a ‘contract for services’ and grants some flexibility, the reality of the obligations and the framework of control can lead HMRC (and the courts) to conclude that the relationship is one of employment for tax purposes.”

Where does this leave us? In truth not really in a different place. Carefully contract; get it independently assessed (the IIM recommends QDOS for example), make sure that you have a SDS (Status Determination Statement)  that is both in place (outside IR35) and that you agree with and you keep track of how the contract is operated, making sure the client agrees with your view of the world as you progress. Keep notes.

Then, if HMRC wish to have a look, you are well prepared. Also note that as part of your membership, the IIM provides basic tax investigation insurance through a third party. Make sure you know how to access it just in case.