CookieCutter have been trying the Employment Status Service tool for different situations. Using our own contractors and clients as examples and also contrived situations where we test to see what happens.
We have been getting mixed results. In several cases, the tool was unable to determine the tax status of the engagement.
In the public sector if the tool produces an in IR35 result, the client must apply the decision. In the private sector, the decision is guidance . There is no apparent difference in the methodology used in the tool between public and private sector clients. We can only speculate that in a very short time the use of this tool will be applied across the board for both public and private sector roles where IR35 could be relevant.
We will of course be monitoring this closely.
The guidance states that where the tool has produced a decision, HMRC will accept the result. They do state that this will not apply where the tool has been contrived to create a desired result. This means you need to fully understand the questions and your answers when completing the tool. The actual reality of the role needs to be considered.
However, with public sector bodies starting to blanket put all roles in IR35 to mitigate any risk that they become liable for PAYE, it almost makes the tool pointless.
Will contractors be able to challenge the public body as to the status of a role using this tool and change it? We will have to wait and see.