IR35: Use of HMRC CEST tool drops by more than 70%, delayed FOI reveals

Private sector reforms

During the 2020-2021 financial year, CEST returned a total of 703,620 results overall, rising to a peak of 806,432 results the following financial year – when the private sector reforms came into force, the HMRC figures show.

Setting aside the results that did not involve contractors supplying their services via a limited company or intermediary, CEST was used 458,413 times during the 2020-2021 financial year, with 50% of users being classified as outside IR35, 31% as inside IR35 and 19% returning an undetermined result.

During the “peak” year of 2021-2022, 512,025 contractors working via an intermediary used CEST, with 55% determined to be working outside IR35, 25% classified as being inside IR35 and the remaining 20% undetermined.

By the 2023-2024 financial year, CEST usage among this group of contractors dropped to 138,758, which is 73% lower than the peak usage. The number being classified as outside IR35 had risen to 64%, while the number registered as inside IR35 had dropped to 17% – and 19% remained undetermined.

“This data confirms what many in the contracting sector have long suspected: confidence and use of HMRC’s CEST tool have fallen,” said Chaplin. “Whilst market factors play their part, we’ve seen no evidence of a collapse in contractor demand that would explain a 73% drop in usage. What’s more likely, and what we are seeing on the ground, is that companies are more informed about IR35 and the flaws in HMRC’s tool and are not using it because it doesn’t deliver the certainty they need.”

HMRC’s take

HMRC, meanwhile, has a slightly different take on why usage of CEST has been in decline since its “peak” year of 2021-2022.

“We always expected use of the tool to reduce as employers familiarised themselves with the 2021 off-payroll working reforms and the majority of those who use the tool are satisfied with the service they receive,” a spokesperson for HMRC told Computer Weekly.

What that statement does not account for is why usage of CEST by PSC contractors has, on a year-on-year basis, dropped by half (48%) between the 2023-2024 and 2024-2025 financial year, said Chaplin.

“Usage has dropped off by a half in the last year-on-year measure – many years after the familiarisation with the reforms took place,” he said. “So [HMRC] claiming those left using the tool are satisfied is a rudimentary statistical mistake called survivorship bias – mistaking a visible subgroup as representative of the entire group.

“A credible satisfaction measure should take account of the other half of people who chose to abandon using the tool.”

Digging into the drops in usage

In the FOI response, the figures for the 2023-2024 year are split into two six-monthly periods, with an advisory note that the April 2023 to October 2023 data was recorded before HMRC completed the migration of CEST to its Ocelot platform.

As reported by Computer Weekly at the time, Ocelot is an in-house developed platform that is billed by HMRC as “enabling the rapid production of interactive guidance” to make tools like CEST easier for users to navigate.

The October 2023 to March 2024 data is also flagged as being recorded once the Ocelot migration had been completed.

Computer Weekly queried the drop in usage since CEST was migrated to the Ocelot platform with HMRC, but the spokesperson did not directly answer the question.

Delays and distractions

Following the November 2019 release of the updated CEST tool, HMRC provided month-by-month usage data about the tool on a Gov.uk portal, but that stopped in September 2021.

Anyone wanting sight of those figures after that date could ask HMRC for them via the FOI scheme, which is a course of action ContractorCalculator’s Chaplin has previously followed.  

In response, Chaplin was sent a data dump by HMRC in March 2023 that contained usage figures for the tool covering the period up to January 2023 in response to one of his FOI requests.

In February 2024, Chaplin made a follow-up request for the most recent set of usage figures for the tool, but this was refused, as confirmed by documents seen by Computer Weekly. The reason given was that HMRC would be making the data publicly available within six months.

When the requested data failed to materialise in that timeframe, Chaplin got back in touch with HMRC, which responded the following month to say the delay was down to the onset of the July 2024 general election.

“It appears the previous FOI reason for withholding the data (because they already planned to publish it) fell away, and there was never any plan to publish it, otherwise they could have withheld them again using the same reason,” said Chaplin.

On 25 April 2025, HMRC had still not released the requested figures, prompting another FOI request from Chaplin. On Tuesday 5 June 2025, the agency finally sent through the usage figures, covering the 2020-2021 financial year to April 2025, with an apology for the delay in passing them along.

The reasons why the data has taken so long to materialise is anyone’s guess, and it is also curious that – despite saying the data would be shared publicly – the CEST usage tracker portal has still not been updated since September 2021.

Speaking to Computer Weekly, Seb Maley, CEO of contractor insurance company Qdos, said given that HMRC maintains it will always stand by the results that CEST returns, the fact usage data is not publicly available is inexcusable.

And now that data has been shared, it highlights the disconnect between HMRC’s opinion on how good a job CEST does and how it performs in real-life.

“HMRC has maintained the rhetoric that CEST is up to the job. This is despite it still not aligning fully with case law and being unable to determine status around one in five times and [its results] even being overlooked in tribunals,” he said.

“The reality is that CEST poses a risk to anyone who relies on it solely to determine IR35 or employment status – regardless of whether the tool classes a contractor inside or outside IR35,” he continued.

“This tool will have a deciding say over how much tax many thousands of contractors pay, which is one of the reasons having a view over how it’s used and the results is so important.”