A Freedom of Information (FOI) request submitted by IR35 compliance specialist IR35 Shield has revealed that usage of HMRC’s Check Employment Status for Tax (CEST) tool fell by a further 43% during the 2025-26 tax year, continuing a dramatic downward trend that has seen overall usage collapse by 71% in just two years.

The latest figures show total CEST usage falling from 458,894 determinations in 2023-24 to 135,178 in 2025-26, a 71% reduction. Also, approximately one in five users continues to receive an indeterminate result from the tool.*

The findings suggest that firms are continuing to abandon CEST in favour of alternative status assessment solutions and more comprehensive compliance processes.

Commenting, Dave Chaplin, CEO of IR35 Shield, said: “The headline finding is simple: CEST usage has fallen again by a further 43% in the last year and 71% in the last two years. Firms are choosing better alternatives.

“The majority of firms we speak to for the first time are either lifting blanket bans or seeking to move away from using CEST, having realised it is not compulsory to use, nor does it give them the level of certainty they need.

“For the best protection, firms should use a full compliance service from specialists with front-line HMRC status enquiry and tribunal experience who deliver certainty whilst alleviating the administrative burden.”

The decline comes despite no changes to the tool or legislation and follows years of criticism from contractors, advisers and employment status experts regarding CEST’s reliability.

Added Dave Chaplin: “Businesses are increasingly recognising that weak status determination processes can create significant long-term compliance problems.

“Firms do not want the risk of an HMRC compliance check dragging on for years. They want robust assessments, comprehensive processes and confidence that an HMRC compliance check will be completed within months, rather than years.”

The latest figures may also be due to CEST becoming outdated and no longer reflecting current employment status law.

Continued Dave Chaplin: “The underlying CEST logic has not been updated since November 2019 and was based on HMRC’s view of the law at that time. Despite the courts dismissing HMRC’s position in key areas, upon which the tool was based, the tool has not been updated.

“HMRC lost a recent employment status case involving PGMOL, where the judge concluded that the engagements contained none of the hallmarks of employment. Yet if you input the facts of that case into CEST, the tool reaches the opposite conclusion and implies the case was finely balanced, which is plain wrong.

“CEST remains misaligned with the law and does not provide the reliability firms need. The continued decline in CEST usage reflects that.

• Overall CEST usage fell by 43% in 2025-26 compared with 2024-25.
• Overall CEST usage has fallen by 71% in the last two years.
• 67% of intermediary determinations are now classified as Outside IR35.
• Approximately one in five intermediary users receives an indeterminate outcome.
• Approximately one quarter of sole trader users receive an indeterminate outcome.

*HMRC Freedom of Information response FOI2026/60608, obtained by IR35 Shield, June 2026.

IR35 Shield is a leading specialist consultancy in IR35 with over 20 years of experience in the crucial area of status case law. IR35 Shield provides market-leading IR35 status determination software, IR35 training, and expert legal and tax defence services to support firms in all matters related to IR35 status compliance.