The DWP have been landed with a tax bill of £87.9 million as a result of incorrectly determining the status of its contractors. This is despite their reliance on HMRC’s Check Employment Status for Tax (CEST) tool.
From 2017 the responsibility for making the relevant status determinations was transferred from contractors to end hirers in the public sector. With the same rules now in force for the private sector, it is clear that businesses should exercise caution when using the CEST tool in isolation to make decisions on the status of their contractors.
An expensive lesson learnt and a sober reminder that is is vital to make sure that the status of anyone working in your business is determined correctly. If you are unsure about the status of anyone working in your business, get in touch with one of our team who will be more than happy to help.