are recruiters liable for ir35?

CEST la vie: IR35 confusion

• Who is liable for IR35 tax bills? A new report passes a damning verdict on the Government’s own self-assessment toolkit.

• No reason to panic, says CEO, as Capita reports significant fall in profits

• Which positions do recruiters find the hardest to fill? New data from the American jobs market may provide UK insights.

Experts critical of HMRC IR35 Toolkit

A review of the Government’s Check Employment Status for Tax service (CEST) tool has cast doubts over its validity.

The CEST test, which aims to offer legal guidance for recruiters and employers, is described as “woefully inaccurate” by critics.

Contractor Calculator, the freelancing and contractor consultants, published their findings following a 14 month investigation into the CEST. They highlight several key failings in the government’s guidelines, and conclude that its outcomes are “biased” and “unreliable”.

CEST aims to provide recruiters and employers with guidance on the legal tax status of certain workers. At present, some contractors operate in an area of legal uncertainty. Changes to tax law could mean employers – and even agencies – are liable to for some of the tax bill for these workers. Consequently, establishing who is liable for IR35 status tax bills has remained a top concern for recruiters.

The report by Contractor Calculator drew upon 557 pages of court rulings from IR35 disputes. In contrast, a Freedom of Information (FOI) request by investigators found that CEST was developed using just one page of rulings.

Findings: Can CEST provide legal guidance for recruiters?

The report found that CEST returned legally accurate results in just 14 of the 24 test cases. This equates to a success rate of just 58 per cent. Three cases provided the correct verdict, but for the wrong reasons – a situation investigators described as “false positive”. In the remaining seven cases – almost a third of all tests – the judgement provided by CEST was legally incorrect.

The data supports recruiters’ previously-held skepticism about CEST. In 2017, agencies reported overwhelmingly negative experiences (85 per cent) when using the system.

The authors of the report concluded that the CEST was “heavily biased”. Inaccurate results would most frequently indicate that test subjects were “deemed employees”.

Two weeks ago, APSCo went into bat for recruiters, explaining to the government how IR35 affects recruitment agencies. We reported at the time that APSCo feared arbitrary deadlines could create chaos across the industry. It is the government’s aim to roll-out IR35 changes across the private sector in the near future.

You can download the Contract Calculator report here.

Outsourcing firm Capita sees profits fall

Outsourcing firm Capita has reported a 4 per cent fall in underlying revenue for the first half of 2018. Total income was £1,978m for the first six months of the year; compared to £2,065.9m in 2017.

Pre-tax profits for the same period fell by more than one half (58.7 per cent); slipping from £195m, to £80.5m.

Capita Group attributed the fall to weakness in the apprenticeships market, and an increase in internal investment. CEO John Lewis said the figures reflected “progress on the plans we set out to simplify and strengthen the business.”

Capita has previously come in for criticism from the British government for under-performing in its role as the Army’s recruiter. The group currently holds a decade-long contract, which is valued at £44 million a year.

Hard to Fill: the toughest vacancies for recruiters

Do you remember, back in March, when we presented the list of Britain’s hardest to fill vacancies? And do you recall how the rather spurious research methods resulted in roles including “soccer manager” and “dog walker”?

Well, now a more thorough investigation has been carried out. Hopefully, its results will prove more informative for recruiters.

The report by Career Cast (via Recruitment Grapevine uses data from the American jobs market and government to estimate the most difficult roles to recruit for.

While the results are hardly a scientific insight of the UK jobs market, they may provide some equivalence.

  • Application Software Developer (£78,439)
  • Construction Labourer (£25,776)
  • Financial Analyst (£64,961)
  • Home Health Aide (£17,824)
  • Information Security Analyst (£71,358)
  • Medical Services Manager (£74,394)
  • Nurse Practitioner (£85,483)
  • Personal Care Aide (£17,800)
  • Physical Therapist (£64,746)
  • Truck Driver (£32,735)
  • Does the data hold true for the UK market? From care to construction, there are clearly some similarities amongst the findings.

    Click for more News