HMRC CEST Tool – What is it and why should dentists care?
HMRC CEST Tool – What is it and why should dentists care?
A HMRC tool that attempts to make black and white out of the typically grey area surrounding employment status.

It’s been rumbling around for many years, but the self employed status of dentists has again recently been brought to the forefront of everyone’s minds with the announcement from HMRC that they are removing their longstanding dispensation that dentists are indeed self-employed provided they use and follow a BDA model contract. The removal of the dispensation is due to come into effect from 6 April 2023.

If you keep up to date with the BDA opinion on the matter their tone is one of calm and reassurance. They assert that the removal of the dispensation is nothing more than HMRC no longer referring to third party advice in their guidance, and that their lawyers are confident very little will actually change.

When all is said and done though, and with HMRC’s history in targeting the self-employed in the past (I’m sure everyone remembers IT contractors?) can we really be confident that these changes will be as minimal as the BDA suggests?

One term you will likely have to get familiar with in the near future is what’s known as CEST, standing for ‘Check Employment Status for Tax’. It’s a HMRC tool that attempts to make black and white out of the typically grey area surrounding employment status. Whilst the tool itself has its fair share of critics, HMRC are undoubtedly going to become more heavy on referring people to using this tool, especially as the onus to confirm people’s employment status now rests on the shoulders of the employer themselves.

So how does the tool work?

The test will take you through a series of questions designed to make an assessment on whether you are employed or self employed. The questions cover topics such as:

  • Are you working through a limited company?
  • Are you an office holder, such as a director?
  • Can you/have you sent a substitute to do your work?
  • Does your client have the right to decide how your work is completed?
  • Does your client have the right to decide your working hours?

Your answers to these questions will help the tool produce an answer on whether your arrangement constitutes a self employed or employed contract. As I said, the tool itself is often derided for its results, however HMRC state they will stand by the results you get from this tool, so it’s worth understanding how the system works.

If you are a self-employed associate worried about your status, or a principal concerned about the working arrangements you have with your dentists, get in touch today.

The information contained in this article is based on the opinion of Hive Business and does not constitute formal tax advice. Any tax outcomes will be based on individual circumstances, tax legislation and regulation, which are subject to change in the future. You should seek specific advice before embarking on any course of action. Hive Business does not provide regulated Financial Advice, including advice on investment, insurance or lending products or their suitability for you. This article is provided for information only and does not constitute, and should not be interpreted as, investment advice or a recommendation to buy, sell or otherwise transact, or not transact, in any investment including Bitcoin and other crypto. Any use you wish to make of any information contained within this article is, therefore, entirely at your own risk.

By Connor Smith Accountant
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