HMRC has had its say after it came to light that the government agency has no documentation about the development of its CEST tool.
An investigation led by ContractorCalculator revealed that the only documented output from the series of workshops carried out during the creation of CEST were the set of rules the tool now uses. These are already in the public domain.
Anyone who has read our coverage of what ContractorCalculator found will acknowledge the tricky situation HMRC now finds itself in.
It has been forced to explain the process that took place during the CEST tool’s development. This included the aforementioned workshops, which were attended by ‘officials, lawyers, tax and IT professionals’.
HMRC sent a response to ComputerWeekly about the recent findings. This claims that sufficient testing of the tool had been carried out.
“The Check Employment Status for Tax digital service was rigorously tested with HMRC’s lawyers against live and settled cases,” a spokesperson for HMRC told ComputerWeekly. “It reflects employment status case law". "The cases tested helped form the rules that underpin CEST, which are publicly available.”
This will do little to appease the organisations that have slated the CEST tool from the off, because the latest revelations about its inefficiencies won’t just go away.
Furthermore, the lack of an appeal process seems a huge oversight by HMRC. This is particularly so given the general feeling many have towards CEST.
As pointed out previously, ContractorCalculator highlighted major flaws with the tool in March 2017. Most noteworthy was that they used the tool to judge a number of historic IR35 cases. In only 37% of cases was the correct outcome returned.
Without no appeals process there is a problem, because the hypothetical 63% of contractors who get incorrect results from the tool will be left in the lurch.
Something clearly needs to be done. The prospect of an official inquiry into the tool’s development has already been bandied about in some quarters, and as a result it will be interesting to see what else may come to light if such an inquiry goes ahead.