A Freedom of Information (FOI) by IR35 compliance firm IR35 Shield has revealed this news, despite explicit promises made to parliament by the head of HMRC that the tool – relied upon by countless firms to assess IR35 status – would be continually revised to align with evolving case law.

The lack of updates to CEST in five years contradicts the promise made by Jim Harra of HMRC, on 4 March 2019, to the Public Accounts Committee, when he told them: “We continually update the tool as new tribunal and court decisions are made about employment status, as well as continually increasing its scope so that it can respond to more and more types of cases... It is an ongoing, unending process.”

Since the last published update to the CEST decision logic, there have been 20 IR35 tax tribunal hearing decisions, including a significant Atholl House Court of Appeal decision, “but the CEST logic has remained unchanged”, said Dave Chaplin, CEO of IR35 Shield. 

Chaplin filed the FOI request, which HMRC received on 9 February 2024.

The FOI to HMRC was responded to by the revenue body on 4 March 2024 and confirmed the public internet locations of the source code, and pointed to the most recent set of decision logic upon which the live tool is based. The online repository indicates the files have not been updated for five years. 

“The logic has not changed from the data already held in the public domain, nor has the logic changed since CEST moved to its new guidance platform. As and when we make updates to the logic, those changes will be communicated publicly,” HMRC said in its response.

Commenting on the latest revelations, Chaplin said: “The stagnation of CEST means that businesses using it to determine the IR35 status of contractors are making decisions based on outdated logic that no longer reflects the current legal landscape.

“CEST has remained frozen since 2019, despite the landmark Atholl House Court of Appeal decision that dismantled HMRC’s approach to IR35 status determinations. The FOI response provides irrefutable evidence proving CEST’s decision engine has been collecting dust for half a decade.

“Continuing to use methods based on the now-obsolete HMRC Policy View of status case law could lead to significant tax liabilities and penalties. Firms should heed the warnings and audit its compliance process.”

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