Which IR35 assessment tool is best for you?

Even with the initial leniency, HMRC did warn that businesses performing incorrect IR35 assessments will be liable for the tax - but, the implementation of IR35 was accompanied by widespread concern about the accuracy of results from the HMRC CEST tool. Recent disclosures suggest that this scepticism may be warranted.

IR35 was rolled out for the public sector in 2017 and HMRC revealed that multi-million pound tax liabilities have been levied from three high-profile government organisations: the Department of Work and Pensions (£87.9 million); the Home Office (£29.5 million), and HM Courts and Tribunal Service (£12.5 million).

HMRC's IR35 assessment tool - Check Employment Status for Tax (CEST)

These liabilities are all due to the organisations getting historical employment status assessments for their off-payroll workers wrong. They relied on HMRC’s CEST tool to do their assessments.

This is a red flag for private sector organisations who haven’t yet got a reliable process in place and depend on the CEST tool for IR35 assessment and compliance checks. HMRC are clearly prioritising and mobilising their enforcement activities around compliance.

Grant Thornton's IR35 assessment challenger tool - Employment Status Intelligence Platform (ESIP)

Our team of employment tax specialists are leading the way on improving accuracy in IR35 compliance checks by developing our own IR35 status tool: the Employment Status Intelligence Platform (ESIP).

ESIP is more than just an employment status tool. Its ongoing monitoring facility ensures that employers continually maintain correct IR35 compliance checks.

To find out more, read about how ESIP compares to CEST.

How can ESIP help you?

• the tool has been created by employers responsible for getting this right, not off payroll workers
• it considers the seven key employment status indicators, including Mutuality of Obligation (MOO)
• it considers the weightings towards both an employed and a self-employed status and provides a risk of challenge rating
• provides a result for every completed assessment — unlike the CEST tool, which leaves c.20% undetermined
• assessments can be part-completed, saved, and recommenced at a later stage as required
• allows users to record comments between those reviewing assessments and those that complete the questionnaire
• documentation (ie contracts and other supporting evidence) can be uploaded
• notifies users when IR35 re-assessments are due
• employment status reports meet the statutory requirements for a status determination statement (SDS)
• includes contractor appeals management functionality
• supports the recruitment of contractors through the preliminary assessments' functionality for roles prior to the individual being recruited.

We can help you get IR35 assessments right and avoid accruing massive tax liabilities, which could have a material impact on your organisation further down the line.

100 businesses use ESIP, including over 1800 users. The tool has already reliably completed 8000 IR35 employment status assessments. As HMRC's expectations of accuracy in IR35 compliance checks are only going to rise, we're supporting our clients to get their assessments right with user-friendly software.

To join the organisations already experiencing the benefits of the ESIP IR35 tool, book a demo and get in touch with one of our employment tax specialists.