A Critique of HMRC's FOIA Response 1

@Dr Iain Campbell made a request under the Freedom of Information Act (FOIA) for HMRC’s documentation regarding their testing of the controversial CEST tool. Although HMRC initially insisted that they could not release this before the end of April 2020, it was suddenly released on 17th March. It is tempting to think that this may have been something to do with the grilling that Lindsey White and Cerys McDonald received at the hands of the House of Lords’ Sub-committee on the Finance Bill on 16th March (see here: https://parliamentlive.tv/Event/Index/40bd6add-48a1-45aa-a018-6a4a1067d261 .

HMRC released seven documents, some of which were web pages, with a home page here: https://www.gov.uk/government/publications/check-employment-status-for-tax-cest-2019-enhancement . I have converted all of them to pdf files which will be attached to each of the articles in this series of critiques and I have prepended numbers to their titles to assist with organisation. With this document are the home page and “Check Employment Status for Tax (CEST): 2019 Enhancement Summary ”.

The home page is mainly just a list of other documents referred to, but it finishes up with a link to a “detailed summary of the work involved and results of this project.” This would appear to an extremely important link for a technical person wanting to understand how HMRC managed to get themselves into their current position regarding IR35: unfortunately, the link does not work and ends in a 404 error. It would be tempting to suggest that this is emblematic of the quality of their IT work.

Document: Check Employment Status for Tax (CEST): 2019 Enhancement Summary

This an 8-page document that purports to describe the enhancements that were made in 2019 to the CEST tool that was introduced in 2017, primarily for use in public sector organisations. It claims that over 300 stakeholders were involved in the enhancements, and that the CEST questions were made “clearer and easier to understand”. Apparently CEST’s question catalogue was expanded so that it could consider more detailed information. Special guidance (https://www.gov.uk/hmrc-internal-manuals/employment-status-manual/esm11000) was published to help “customers”. That link does work, feel free to have a play with CEST.

The first thing that was done was a review of comments made about the 2017 version, and we’ll discuss that in detail in a later article. They also say they had a series of 8 meetings with 15 stakeholders (origin unknown) in September and November 2018. No results are available from these consultations, but 10 further events were held in March and April 2019 with 70 participants from both public and private sector organisations. We’ll be discussing this linked document in part 3 of this series.

They spent some time improving the accessibility (for less able users) and published their findings here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/872642/Enhancement_to_CEST__IT_Test_plan___approach.pdf. This document will be discussed later.

They did some work to ensure that the CEST tool was easy to use and are happy to confirm that each page satisfies WCAG 2.1. This is not a bad thing but has no bearing on whether or not the tool provides the correct output.

They consulted another 25 people, who may or may not be be tax advisors. They then shared their findings and their rationale with a further 150 people at 14 events in September 2019. The result of this was that one question was removed from CEST.

They claim to have carried out extensive testing (I think they mean specifically functional testing) but it all seems to have involved comparing the 2019 tool’s output against the 2017 tool. Modified by current and settled litigation. They say they identified “no significant issues and the service produced results in line with HMRC’s view of status”.

CEST was assessed against the cross-government service standards – we’ll return to this in a future article.

They say (effectively) that it is not possible to assign a definitive cost to CEST but adding up the numbers in this document comes to least ￡1,841,500, involving 10.4 full-time contractors.

CEST has been used nearly 200,000 times up to November 2019. Statistics for determinations (November 2019 – January 2020) are: Inside – 34%, Outside – 46%, Indeterminate – 21%.

Critique

As a long-time Testing Manager I am shocked that the main thrust of testing seems to have been by comparison against other gauges, e.g. the 2017 version and various undefined legal cases. There is no description of the rules that define the operation of the 2019 product, simply a statement that it was tested by comparison. Without any justification for the quality of the gauges these comparisons are simply meaningless. We do not have the test scenarios or test scripts, nor any formal test reports.

We only have HMRC’s assurance that they “identified no significant issues” and that “the service produced results in line with HMRC’s view of status”. These statements are completely meaningless without any appropriate context.

There is a lot else to criticise regarding this document. Who were the various stakeholders consulted? What rules governed the performance of CEST? Where are the functional specification, the test scripts and the test reports? How many defects were found and what were they? How did they manage to spaff nearly ￡2M on what should be a fairly simple discrimination tool?

This critique will be continued in Part 2.

(20/3/20) Part 2 is here: https://www.dhirubhai.net/pulse/critique-hmrcs-foi-response-cest-part-2-david-kirkwood-msc-miet/

David Kirkwood MSc MIET

17th March 2020