Determining employment status correctly is one of the most important steps clients can take to protect themselves under IR35, and it is an area where many organisations still feel uncertain. With HMRC placing responsibility for status decisions firmly on the end client, failing to take reasonable care can result in significant penalties, backdated tax liabilities and reputational risk. For hiring heads engaging contractors in accounting, audit and tax roles, using a recognised and defensible process is no longer optional, it is essential.
The Check Employment Status for Tax (CEST) tool, provided by HMRC, is designed to help organisations determine whether a worker on a specific engagement should be classed as employed or self-employed for tax purposes. While IR35 legislation and its enforcement have not been without controversy, CEST remains HMRC’s own assessment framework. Importantly, where accurate information is provided and the outcome is followed, HMRC has stated it will stand by the result. From a risk perspective, this offers clients a level of protection that informal or undocumented decisions simply do not.
At Sheridan Maine, we recognise that some organisations have concerns about the limitations of CEST and the broader IR35 regime. However, in practical terms, using HMRC’s own tool is often the most risk-averse way to proceed. It demonstrates reasonable care, provides a clear audit trail and helps ensure that decisions are based on the actual working practices of the engagement rather than assumptions or blanket policies. When combined with well-designed roles and compliant contracts, CEST can form a strong foundation for IR35 decision-making.
As specialists in accounting, audit and tax recruitment, Sheridan Maine works closely with clients to support compliant hiring strategies. We encourage clients to use CEST as part of a structured approach to contractor engagement, alongside professional advice and clear communication with workers. By taking these steps, hiring heads can reduce exposure to penalties, make informed decisions with confidence and continue to access the specialist talent their businesses rely on - safely and responsibly.
