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HMRC Admits IR35 Tool Assumes All NHS Locum Staff Fail Key IR35 Test


Online contracting site ContractorCalculator has learned that HMRC deliberately designed its IR35 Check Employment Status for Tax (CEST) tool without testing for mutuality of obligation (MOO), one of the fundamental tests in case law essential to establishing whether an employment relationship exists and therefore whether IR35 should apply. It means that thousands of contractors, locum doctors and nurses who are assessed using CEST are either being forced into false employment based on results that are legally inaccurate and incorrect or leaving the public sector all together.

The admission came out at an NHS Trustees meeting on 29th September 2017 when Mark Frampton, leader of the employment policy team at HMRC, delivered a webinar on implementing IR35 in the NHS.  NHS Trustees learned that HMRC assumes MOO should be assumed to be present in all public sector engagements. He then added that because of this assumption they did not include questions about it in their CEST tool.

Mutuality of obligation, or MOO, is one of the two irreducible minimums that needs to be established to assert that an employment relationship exists – and therefore IR35 applies. MOO is present if there is a sustained obligation for an employee to provide regular work for a worker, and for the worker to work those hours and be obliged to accept the work offered. Ongoing mutuality of obligation doesn’t exist where the Trust can terminate the engagement immediately – which can be the case for many locum doctors and nurses.

Commenting on the alarming revelation, Dave Chaplin, CEO and founder of ContractorCalculator said:

“We have known all along that CEST does not align with case law and HMRC has, thus far, denied it.  Now HMRC’s own head of policy has admitted that the tool makes assumptions that are factually incorrect and, more alarmingly, HMRC designed the tool to do so.  HMRC has appointed itself judge and jury on matters of employment status when it does not have the powers to do so, and is now leaving itself wide open for judicial review. They have now been caught contriving their own version of the law to wrongly catch locum doctors and nurses with its flawed status tool.

“HMRC has further pressured the NHS by stating it will only recognise assessments conducted via CEST.  The statement itself is baseless, because any judge is required to examine all factors, including the fundamental ones the CEST tool currently omits.

“Ironically, HMRC recently won a case against Robert Glenister, who featured in the programme Hustle. CEST is a hustle by HMRC to encourage wrongful assessment of employment status to collect more tax.

“The consequence though is that these measures are driving locum staff out of the NHS which is exacerbating an already stretched health service.”


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With over 15 years experience within the Recruitment industry, Mark considers digital publishing, digital engagement, recruitment marketing and advertising (all media), digital video production, creative design and more recently social media development as his core knowledge and where a lot of his experience lays.

Having been at the forefront of the digital publishing sector for well over a decade, Mark has founded numerous job boards and publishing businesses.

He has very strong business ethics, built on transparency and trust and equally as important, he enjoys close working relationships with all clients. A self-confessed digital geek Mark lives and breathes online media ensuring Recruitment Buzz stays ahead of the curve.

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