Back to News

by

Why HMRC’s CEST ‘Update’ Doesn’t Change the Compliance Risks for Your Business

Earlier this month, HMRC quietly refreshed its Check Employment Status for Tax (CEST) tool — a resource many organisations rely on to help determine whether contractors fall inside or outside IR35. But while the look and feel of the tool may have had a facelift, scratch beneath the surface and it’s clear that very little has changed where it actually matters.

So, what’s different?

In truth — not much. The update appears to be largely cosmetic, focusing on minor adjustments to the layout and language to improve usability. However, the most critical part of CEST — the decision-making logic that underpins status determinations — hasn’t been touched since 2019.

That’s significant because, in the six years since CEST’s logic was last reviewed:

  • More than 30 IR35 tribunal outcomes have been published.
  • The legal landscape around IR35 has evolved.
  • Compliance expectations, particularly around demonstrating ‘Reasonable Care’, have increased.

Yet, CEST continues to operate using outdated legal thinking, failing to account for key case law developments and nuances in status determination.

Why relying on CEST still puts your business at risk

Many organisations — especially in the public sector — have used CEST assuming it offers a safe route to compliance. However, use of CEST alone doesn’t automatically protect you from risk. In fact, there have been multiple high-profile instances where public sector bodies using CEST have still been fined for non-compliance.

The issue is that HMRC’s own guidance states businesses must take ‘Reasonable Care’ when determining IR35 status. Reasonable Care means making informed, well-documented, and up-to-date decisions — something that relying solely on an outdated tool cannot deliver.

Without considering:

  • Recent tribunal outcomes
  • Evolving case law interpretations
  • The commercial and contractual reality of each engagement

…businesses leave themselves exposed to compliance failures, financial penalties, and reputational damage.

The bottom line: CEST is not a compliance strategy

IR35 status determination isn’t a tick-box exercise. It requires legal expertise, nuanced judgement, and ongoing reviews to remain compliant in a constantly shifting legal environment.

If your business is still relying on CEST as a primary or sole compliance tool, now is the time to reassess your approach. A modern, robust IR35 compliance process should include:

  • Independent, expert-led status assessments
  • Regular reviews of contractor arrangements
  • Clear documentation and audit trails
  • Human judgement applied alongside any digital tools

Speak to Brookson Legal

At Brookson Legal, we help businesses navigate IR35 safely and confidently. Our specialist team keeps up with every legal development and tribunal outcome so you don’t have to — ensuring your compliance processes meet Reasonable Care standards and protect you from unnecessary risk.

If you’d like to sense-check your IR35 processes or move beyond CEST, get in touch with our team.