IR35 Protect Vs HMRC CEST Tool

Benefits of IR35 Protect for agencies and end clients:

• Access to a designated project team - You will be assigned an experienced project team to assist you all the way from start to finish, along with ongoing customer care
• Reasonable care achieved – The IR35 Protect service sufficiently fulfils HMRC’s requirement for the end client to take ‘reasonable care’ when determining a contractors IR35 status
• Full SDS's produced - A 25-page detailed SDS is produced for each contractor
• Contractor query & dispute management – Bar2 take full control when it comes down to managing contractors’ queries and disputes and keep all parties informed
• Regular reporting, dashboards, and financial risk reports – Bar2 IR35 Protect provides useful tools to help budget and minimise risk with a clear overview of the IR35 project
• Decisions based on case law – With over 100 questions answered from the end client, fee payer and contractor, the whole picture is considered, and notably questions are based on case law
• Regular reviewing and monitoring of contractors’ status – The software used enables frequent check ins with contractors to review and monitor their status throughout the assignment
• Insurance backed determinations - IR35 determinations will have the extra benefit of a tax and legal liability insurance cover to protect against HMRC investigations*
• Doesn't ignore mutuality of obligation - The full picture is considered as all questions and sections are asked every time
• Effective in collaboration – The end client, agency, fee payer and contractor are involved throughout the entire process

Disadvantages of IR35 Protect for agencies and end clients:

• There is a cost to the IR35 Protect service

Benefits of using HMRC CEST Tool:

• Free of charge for the hirer, agency or worker to use
• The tool is readily available on the HMRC website
• HMRC will stand by the result as long as all information provided is accurate

Disadvantages of using HMRC CEST Tool:

Although the HMRC tool is free, readily available and claims to honour all determinations, there are also many limitations that end clients and agencies should be aware of including;

• Mutuality of obligation (MOO) ignored – Case law regarding MOO in both recently won and lost cases, has indicated the importance and relevance of considering MOO when deciding on a contractors IR35 status. For reason’s unbeknown, HMRC have decided to not include a MOO section or questions within the CEST tool.
• Limited flexibility in reviewing and monitoring – The CEST tool does not offer flexibility, or the complexity required for additional monitoring or reviewing of the contract or assignment in question. For example, monthly check ins to identify if the assignment or working conditions have changed at all, which could in turn affect the IR35 status.
• Limited collaboration – The hirer, agency or contractor can only undertake the CEST tool individually, denying the ability for important question’s to be answered collaboratively to enable a clearer picture of the contract and working conditions (e.g information such as the workers responsibilities, who decides what work needs to be done, who decides when or how work is done and how the worker is paid etc will need to be clear and determined before undertaking the questionnaire) .
• Full picture not considered - The CEST tool will not ask all questions or sections due to the question skip logic used. It’s dependent on the answers inputted, meaning the whole picture is not always taken into account.
• Requirement of expert resources – A large number of companies will not have the expert resources within their business readily IR35 trained and equipped to understand and navigate the important question’s being asked by the CEST tool.

For further information and guidance surrounding the HMRC CEST Tool, you can visit the GOV.UK website here.