New and improved CEST – now with added guidance!

HMRC have updated the employment status checker, CEST, to improve the customer experience.  They have also issued supporting guidance on how to use and answer the tool, based on the circumstances of the arrangements.

HEI’s can use CEST to check the employment status of your workers, whether the individuals are sole traders or providing their services through their own personal service company (PSC).  There are multiple changes to the tool, including:

• New – ability to choose the nature of the arrangements, i.e. sole trader, off-payroll rules, etc
• Change - questions regarding the individual’s circumstances will be asked only if the arrangements have already started
• Change - the questions themselves have been reworded to encourage better understanding, e.g. examples of benefits provided to the worker
• New - questions on the nature of the arrangements, e.g. worker’s financial risk to identify whether they are in business in their own account and whether they have management responsibilities to assess their role in the organisation
• Change - up front disclaimer that HMRC will stand by the CEST decision if the answers are wholly accurate
• Change - all relevant employment indicators are examined before the status decision is provided.  Previously, answering a question on, e.g. the right of substitution, could have ended the process but more information is now gained

Results remain anonymous; HMRC do not keep a record of status decisions. 

HMRC have also issued guidance on how to use CEST, but importantly, there is more detail on understanding the questions and choosing appropriate answers.

Please be aware that mutuality of obligation is still underrepresented in CEST.  Recent employment status cases have recognised the importance of mutuality of obligation, but this is not being considered to the same degree by HMRC and CEST.

BUFDG members can utilise various resources when considering employment status of workers paid outside of the payroll:

1. Check the HE Common Roles document, which covers a number of roles which are commonly found in universities and provides guidance on whether these would normally be considered as employed or self-employed roles (although of course individual arrangements and circumstances may sometimes differ). 
2. Use the BUFDG Employment Status Tool, which is designed as a series of weighted questions to try to help determine employment status on individual engagements, with more of a focus on the kind of academic and professional services roles found in the HE sector
3. Use CEST for a more general check of your worker’s employment status which provides a decision that HMRC will stand by (but see up-front disclaimer above)

If you have any questions regarding employment status or the resources available, please send them to Julia.