New figures obtained through a Freedom of Information request suggest businesses are continuing to move away from HMRC’s Check Employment Status for Tax (CEST) tool when assessing IR35 status.
The data, obtained by IR35 compliance specialist IR35 Shield, shows total CEST determinations falling from 458,894 in the 2023/24 tax year to 135,178 in 2025/26. That represents a 71% decline over two years.
According to the figures, usage fell by a further 43% during 2025/26 alone.
What is CEST?
CEST was introduced by HMRC to help organisations determine whether a contractor falls inside or outside IR35. The online questionnaire asks a series of questions about working practices and contractual arrangements before producing a status determination.
The tool became particularly significant following the introduction of the private sector off-payroll working reforms in April 2021, when responsibility for making most IR35 determinations shifted from contractors to medium and large clients.
However, CEST has remained controversial since its launch. Critics have argued that it places too much emphasis on some employment status factors while failing to properly account for others that have featured prominently in employment status case law.
For more background, read our guide to how CEST works and some of the criticisms surrounding it.
The latest FOI figures also indicate that a significant proportion of users continue to receive inconclusive outcomes.
According to HMRC data, around one in five intermediary users receive an indeterminate result rather than a clear inside or outside IR35 determination.
PGMOL case raises further questions
Dave Chaplin, CEO of IR35 Shield, told us exclusively today:
“Five years after the private sector off-payroll reforms were introduced, CEST usage has fallen by 71% in just two years. That points to businesses making a conscious decision to move away from the tool, not simply becoming familiar with the legislation.
“CEST’s underlying logic has not been updated since November 2019. The recent PGMOL judgment exposed a clear disconnect between the tool’s conclusions and the courts’ interpretation of the relevant status case law.”
Chaplin’s reference to PGMOL relates to a recent employment status judgment involving professional football referees.
In that case, the tribunal concluded that the referees were not employees for tax purposes.
The decision has attracted considerable attention because it examined several key tests used to determine employment status, including control and mutuality of obligation.
We covered the ruling in detail in our analysis of the PGMOL employment status case.
The latest figures are likely to reignite debate over whether CEST remains fit for purpose in its current form.
HMRC has consistently maintained that it will stand by CEST outcomes provided users answer questions accurately, and the information entered reflects the actual working arrangements. However, concerns about the tool’s methodology have persisted for several years among contractors, advisers and employment status specialists.
The FOI data suggests that many organisations may now be relying on alternative assessment processes rather than using HMRC’s own tool.
Whether that trend continues may depend on future developments in employment status case law and whether HMRC decides to update CEST’s underlying logic to reflect more recent tribunal and court decisions.