CEST Use Collapses as Firms Seek More Certain IR35 Assessments
Use of HMRC’s employment status tool fell by 71 per cent in two years, according to Freedom of Information data, as clients moved towards alternative IR35 assessment processes.
The number of employment status determinations completed through HM Revenue and Customs’ CEST service fell sharply, raising questions about how clients were making decisions for contractors.
Freedom of Information data obtained by IR35 Shield showed that use of the Check Employment Status for Tax tool fell from 458,894 determinations in 2023 to 2024 to 135,178 in 2024 to 2025, a reduction of 71 per cent. Use fell by a further 43 per cent during the 2025 to 2026 tax year.
CEST was developed to help workers and hiring organisations decide whether an engagement should be treated as employed or self employed for tax purposes. For medium and large clients using personal service company contractors, an accurate CEST output can form the basis of a Status Determination Statement.
A fall in use did not remove the legal duty
The off payroll rules do not require a client to use CEST. They require the organisation to determine status, explain its conclusion and take reasonable care. Clients can use other tools, specialist advisers or an internal process, provided the decision reflects the contract and the real working relationship.
IR35 Shield chief executive Dave Chaplin said firms were “lifting blanket bans or seeking to move away from using CEST” because it was not compulsory and did not provide the certainty they wanted.
Critics argued that the underlying decision logic had not been substantially revised since November 2019, despite later employment status judgments. They also pointed to cases in which the facts produced an indeterminate result or where advisers believed the outcome did not reflect the court’s final analysis.
The decline could have several explanations. Organisations may have assessed large contractor populations when the private sector reform began in 2021 and required fewer new checks later. Some may have adopted commercial assessment platforms, while others may have replaced personal service company engagements with umbrellas, payroll or outsourced services.
HMRC defended the service
HMRC said it had always expected use to decline as employers became familiar with the reforms. A spokesperson told The Register that the tool was rigorously tested against case law and that HMRC would stand by its results when the information provided was correct.
That assurance remains important. HMRC’s manual says it will support the determination if the information is accurate and the tool is used in accordance with its guidance. The protection does not apply where answers are contrived, working practices have materially changed or the information entered was wrong.
CEST is anonymous and does not permanently store individual answers or results. Clients and contractors therefore need to retain the output and the evidence supporting it. A result is only as defensible as the information used to obtain it.
What the decline meant for contractors
For IT contractors, fewer CEST checks could be positive if clients were replacing a blunt or poorly understood questionnaire with an individual, expert assessment. It could also indicate that fewer organisations were willing to engage personal service companies at all.
Contractors should therefore ask which process produced the Status Determination Statement and whether someone who understood the project supplied the facts. The most important evidence includes who controls delivery, whether personal service is required, whether substitution is genuine, how financial risk operates and whether the contractor is integrated into the organisation.
An outside result obtained through inaccurate answers offers weak protection, while an inside result based on a generic role description can deny a genuine business the opportunity to trade independently. Both outcomes create risk.
The June data did not prove that CEST had become irrelevant. It showed that the market was no longer relying upon HMRC’s free service at anything like its earlier scale. The next question for contractors was whether the replacement processes delivered greater accuracy, or merely moved status decisions further from view.