CEST TOOL – GETTING IT RIGHT
HMRC issues the following warning, so it’s imperative that you answer the questions accurately as possible when seeking an opinion on your tax status.
HMRC will stand by the result you get from this tool.
Warning: This would not be the case if the information you have provided was checked and found to be inaccurate.
HMRC will also not stand by results achieved through contrived arrangements, designed to get a particular outcome from the service. This would be treated as evidence of deliberate non-compliance, which can attract higher associated penalties.
It is important to note that the following question in particular requires careful consideration;-
Will you have to fund any other costs before your client pays you?
‘This can include non-commuting travel or accommodation, or external business premises for this work only.’
Beware of this question when using the CEST tool to determine your tax status, because even tax professionals are getting tripped up by this one. Understand these four points before answering and keep any evidence that you have to support it, then if HMRC ever checked your result, you will have no concerns about HMRC not standing by the result you have obtained.
- Non commuting travel means you can’t include travel to and from the first or main worksite relating to the contract in question.
- Costs do not include small tools, PPE etc. These are allowable work expenses to be claimed under a personal tax return, and are not specific to the contract in question.
- It doesn’t include qualifications or safety certification, because this question is specific to a particular contract, not your profession.
- This question relates to business expenses that an employee would not incur, or that you need to pay out in order to carry out the tasks required under the contract.