After four and a half years of silence, HMRC finally released an update to its Check Employment Status for Tax (CEST) tool on 30 April 2025. This came after over 30 tribunal cases and key legal rulings had reshaped the interpretation of employment status under IR35.
So, what did this long-awaited update change?
In short: very little. The logic behind the tool, how it decides whether a worker falls inside or outside IR35, remains exactly the same. But while the tool itself hasn’t evolved, HMRC’s guidance has, and that’s where users now need to pay close attention.
No Change to CEST Logic
Despite significant changes in case law over recent years, HMRC confirmed that the underlying logic of CEST has not changed since its last major update in November 2019. To be clear
- The same questions are being asked
- The decision logic is identical
- The so-called “outside IR35 door” remains locked behind the same conditional statements
HMRC even re-published the decision logic alongside a Freedom of Information release to prove its point. Independent checks confirm that nothing in the code has changed from 2019.
This is surprising, given HMRC’s own submissions in major court cases like Atholl House (2022) and PGMOL (2024) were found lacking by judges. These decisions should have prompted a review of CEST’s framework, but they didn’t.
Cosmetic Tweaks, Not Functional Changes
The changes HMRC did make to the tool are minor and cosmetic. Here’s what’s new:
- CEST now asks whether there is a contract in place
- The option “agency” has been removed from the “Who are you?” question
- The disclaimer text is slightly reworded but carries the same meaning
- The question “Has the worker started?” has simply been reordered
That’s it. From a functionality standpoint, CEST still operates on outdated logic, out of step with current employment status law.
Bigger Changes Lie in the Guidance
The most significant updates have come in the CEST user manual, specifically in HMRC’s Employment Status Manual (ESM11000). While CEST itself has not caught up with recent rulings, HMRC’s guidance has become more detailed and restrictive, especially around:
- Substitution
- Control
- Financial risk
These are the critical factors in determining whether a contractor is working inside or outside IR35.
But instead of updating the tool to reflect this newer, more developed guidance, HMRC has placed the burden on the user to read and interpret the manual alongside using CEST.
A Disconnect Between Tool and Guidance
This creates a growing disconnect between the tool and the guidance it’s supposed to follow. While CEST asks a handful of basic questions about substitution, the detailed interpretation lives in the guidance, and you’re expected to read it.
For instance, the tool might ask if a substitute can be sent. The guidance then advises how to interpret the situation and how to answer, potentially leading you to answer in a way that prevents an outside IR35 determination, even when one might be justified.
The same applies to control and financial risk questions, where certain answers are now discouraged via guidance. It appears that CEST isn’t being fixed and users are being trained to give HMRC-preferred answers.
So Why Does This Matter?
Many businesses and contractors still rely on CEST for peace of mind, especially because HMRC says it will stand by the result, provided the tool is used correctly and honestly.
But here’s the problem:
- If you follow only the tool without referencing the updated manual, you could be missing key decision-making logic
- The tool does not reflect current case law
- It has become increasingly difficult to get an “outside IR35” result unless very narrow conditions are met
In short, while CEST looks official, it’s no longer reliable on its own. It’s now only as good as your understanding of the ESM guidance behind it.
What Should Users Do?
If you’re using CEST, whether as a contractor, hiring business, or agency, you should:
- Always read the guidance in ESM11000 before answering CEST questions
- Understand how your answers align with recent case law
- Consider independent assessments if your situation is borderline or complex
- Keep records of how you completed the test and why you answered the way you did
Above all, don’t assume that CEST alone will protect you from HMRC scrutiny. It’s not a shield; it’s a tool and one that hasn’t kept up with the law.
Conclusion
The 2025 update to CEST turned out to be more of a cosmetic refresh than a meaningful upgrade. While the interface may look slightly different, the core logic is stuck in 2019, and that’s a real issue.
HMRC hasn’t changed the tool, but it’s changed the playbook. If you’re still using CEST, make sure you understand the guidance behind it. Because in today’s IR35 landscape, knowing how to answer is just as important as the answers themselves.
