The latest update of HMRC's internal employment status manual could prove useful for businesses and their contractors concerned about reaching the correct decision on the employment status of workers for tax purposes.
HMRC's internal manual, which was updated on 17 January, lists a number of questions that HMRC will seek ask the engager and the worker when attempting to determine employment status.
The list covers around 70 questions in total for both the engager and the worker covering areas such as:
- control and right of control;
- what, where, when and how the work is to be done;
- personal service;
- provision of equipment;
- payment arrangements;
- exclusive services;
- is the worker part and parcel of the organisation?;
- mutuality of obligation;
- the number of engagements; and
- statement of intention.
Susan Ball, RSM employer solutions partner said: 'In November last year, HMRC updated its CEST (Check Employment Status for Tax) tool to help engagers and contractors to determine whether workers fall within the off-payroll rules known as IR35. These rules – which are due to be reformed and extended to the private sector from April 2021 – are designed to ensure that individuals who ought to pay income tax and NIC as employees cannot use a corporate structure to reduce their liabilities.
'CEST is the only tool that will produce an employment status result that HMRC will stand by - provided the information input is accurate and the tool is used in accordance with guidance.
'This latest update to HMRC's internal manual could prove very useful when trying to understand the types of questions which should be asked when making a status assessment and for both engagers and contractors preparing to use CEST.
'While this update is helpful, I am sure both parties would find it extremely useful if HMRC were to publish the full list of questions that could be asked when completing CEST along with links to the guidance on what some of the questions mean. This would assist them in completing CEST accurately which is important if they are going to be able to rely on the results.'