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CEST tool falls in popularity for measuring IR35 status • The Register

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The number of independent UK contractors assessed with the government’s controversial CEST tool has fallen, according to a survey published today.

The survey of 3,750 contractors, conducted by tax advisors IR35 Shield in November 2021, showed 49 per cent got their IR35 assessment using tax authority HMRC’s recommended tool in that same month. In April, the corresponding figure was 56 per cent.

The new IR35 regime, introduced in April last year following a year’s postponement, forces medium and large businesses in the UK to set the tax status of their contractors and freelancers.

The IR35 Impact Survey showed that 65 per cent of respondents said that companies had lost at least half of their contractors. The number of contractors receiving assessments from some kind of external tool rose from 39 per cent to 44 per cent between April and November 2021.

What is IR35?

The IR35 reform was unveiled in 1999. The latest regulation change in April 2021 forced medium and large businesses to set the tax status of their contractors and freelancers. Previously this was set by the contractors themselves.

Contractors found to be within the scope of the legislation – i.e. inside IR35 – will have to pay more tax than they might expect.

The reforms are part of the government’s crackdown on so-called disguised employment, where workers behave as employees but avoid paying regular income tax and national income contributions by billing for their services through personal service companies (PSCs), which are taxed at lower corporate rates.

The measure came into effect in the public sector in 2017. The British government hoped the reforms would recoup £440m by bringing 20,000 contractors in line.

HMRC reckons that only one in 10 contractors in the private sector who should be paying tax under the current rules are doing so correctly. It estimates the reforms will recoup £1.2bn a year by 2023.

The study found 60 per cent would seek an alternative assessment to CEST, which stands for Check Employment Status for Tax. Only 4 per cent trusted HMRC to stand by the tool’s results, with just 5 per cent saying they thought CEST was accurate in the survey. They may have good cause to doubt CEST as a tool for measuring IR35 status.

In December, it was revealed CEST contributed to wrong calls on the tax status of freelance workers in central government, costing over £120m across two Whitehall departments. According to their financial reports, the Ministry of Justice (MoJ) and the Department for Environment, Food and Rural Affairs (Defra) are facing combined additional tax bills of at least £121m due to incorrectly determining the status of their contractors despite following HMRC’s “accompanying guidance” and using the CEST tool. The MoJ owes £72.1m and Defra owes £48m.

Dave Chaplin, CEO of IR35 Shield, said: “The number of firms using HMRC’s Check Employment Status for Tax (CEST) tool is also on the decline, as trust in its accuracy is virtually non-existent. The supposed protection it provides. The drop in use is perhaps due to the multiple government bodies who used CEST and followed HMRC’s guidance but who are now facing combined tax bills and fines of some £250 million.”

However, there were signs of optimism in how contractors are adapting to IR35. “Despite the IR35 earthquake, we are seeing green shoots of recovery emerging, both for contractors and the firms that hire them. The levels of blanket bans are decreasing and the use of specialised assessment firms is increasing,” Chaplin said.

In June last year, the CEST tool was found to produce inconclusive responses for one in five of the million-plus times it was called upon in 16 months.

Statistics from HMRC showed CEST was deployed 1,018,250 times between November 2019 and May 2021. Almost half of the delivered results showed the freelancers to be operating inside IR35, a little over 300,000 were outside, and in 210,100 cases it was inconclusive. ®

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Best podcasts of the week: what does the bloodsucking saga Twilight tell us about society? | Podcasts

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Picks of the week

The Big Hit Show
“Twilight is stupid; if you like it, you’re also stupid.” Why is there so much vitriol towards female Twihards? (Spoiler: misogyny.) In the first run of a series unpicking pop culture’s biggest moments – from the Obamas’ media company – Alex Pappademas starts by dissecting the wildly popular tale of teenage vampire love – and what the reactions to it say about us. Even if you’re not a fan, he raises some great questions. Hollie Richardson

Fake Psychic
Journalist Vicky Baker captivated listeners with Fake Heiress and now she investigates the fascinating story of Lamar Keene, the go-to spiritualist of 1960s America. When he hung up his questionable crystal ball he decided to reveal the tricks of supposed psychics, and Baker asks if that too was a con while pondering the authenticity of the psychics who followed. Hannah Verdier

Deep Cover: Mob Land
Animal lover, lawyer and switcher of identities Bob Cooley is the subject of Jake Halpern’s new season of the reliably mysterious podcast. Cooley was a top Chicago mob lawyer in the 70s and 80s, but what was the price when he offered to switch to the FBI’s side? This dive into corruption quizzes the key figures around him. HV

Chutzpod
This lively, engaging podcast attempts to “apply a Jewish lens to life’s toughest questions”. Hosts Rabbi Shira Stutman and one-time West Wing actor Joshua Malina cover topics ranging from reality TV shows to the Jewish “New Year of the Trees”, via the recent hostage stand-off at a synagogue in the Dallas suburb of Colleyville. Alexi Duggins

Backstage Pass with Eric Vetro
Eric Vestro is a vocal coach who’s worked with the likes of John Legend, Shawn Mendes, Camila Cabello and Ariana Grande. Here, he entertainingly lifts the curtain on their craft, talking to them about their journey in a manner that feels genuinely intimate given their pre-existing relationships. Expect some enjoyably daft voice exercises too. AD

Royally Flush investigates the monarchy’s relationship with the British slave trade.
Royally Flush investigates the monarchy’s relationship with the British slave trade. Photograph: Chris Radburn/Reuters

Chosen by Danielle Stephens

It’s fair to say that in the last couple of years the British monarchy has been put under a microscope for the way they handle their own family members, whether that be an heir to the throne and his American wife, or a prince embroiled in a civil sex abuse case. In a two parter titled Royally Flush, however, the Broccoli Productions’ Human Resources podcast goes back in time to investigate the royal family’s role in the slave trade in Britain, questioning how influential they were in trying to prevent abolition.

This is clearly a pandemic production as audio quality can sometimes be shaky, but the content is an important listen. As the country gears up to celebrate the Queen’s platinum jubilee, writer and host, Moya Lothian-McLean takes us on an unexplored trip down memory lane, presenting fascinating insights into why – despite ample evidence that the monarchy was historically instrumental in propping up the slave trade in Britain – we haven’t heard so much as a sorry coming from Buckingham Palace, according to the program maker.

Talking points

  • Never underestimate the skill that goes into making a good podcast. Over a year since Meghan and Harry’s audio production company Archewell signed a podcast deal with Spotify, they’ve only managed to release a single podcast. Hence, presumably the job ads Spotify posted this week, looking for full-time staff to help Archewell.

  • Why not try: Smartless | Screenshot

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California’s net neutrality law dodges Big Telecom bullet • The Register

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The US Ninth Circuit Court of Appeals on Friday upheld a lower court’s refusal to block California’s net neutrality law (SB 822), affirming that state laws can regulate internet connectivity where federal law has gone silent.

The decision is a blow to the large internet service providers that challenged California’s regulations, which prohibit network practices that discriminate against lawful applications and online activities. SB 822, for example, forbids “zero-rating” programs that exempt favored services from customer data allotments, paid prioritization, and blocking or degrading service.

In 2017, under the leadership of then-chairman Ajit Pai, the US Federal Communications Commission tossed out America’s net neutrality rules, to the delight of the internet service providers that had to comply. Then in 2018, the FCC issued an order that redefined broadband internet services, treating them as “information services” under Title I of the Communications Act instead of more regulated “telecommunications services” under Title II of the Communications Act.

California lawmaker Scott Wiener (D) crafted SB 822 to implement the nixed 2015 Open Internet Order on a state level, in an effort to fill the vacuum left by the FCC’s abdication. SB 822, the “California Internet Consumer Protection and Net Neutrality Act of 2018,” was signed into law in September 2018 and promptly challenged.

In October 2018, a group of cable and telecom trade associations sued California to prevent SB 822 from being enforced. In February, 2021, Judge John Mendez of the United States District Court for Eastern California declined to grant the plaintiffs’ request for an injunction to block the law. 

So the trade groups took their case to the Ninth Circuit Court of Appeals, which has now rejected their arguments. While federal laws can preempt state laws, the FCC’s decision to reclassify broadband services has moved those services outside its authority and opened a gap that state regulators are now free to fill.

“We conclude the district court correctly denied the preliminary injunction,” the appellate ruling [PDF] says. “This is because only the invocation of federal regulatory authority can preempt state regulatory authority.

The FCC no longer has the authority to regulate in the same manner that it had when these services were classified as telecommunications services

“As the D.C. Circuit held in Mozilla, by classifying broadband internet services as information services, the FCC no longer has the authority to regulate in the same manner that it had when these services were classified as telecommunications services. The agency, therefore, cannot preempt state action, like SB 822, that protects net neutrality.”

The Electronic Frontier Foundation, which supported California in an amicus brief, celebrated the decision in a statement emailed to The Register.

“EFF is pleased that the Ninth Circuit has refused to bar enforcement of California’s pioneering net neutrality rules, recognizing a very simple principle: the federal government can’t simultaneously refuse to protect net neutrality and prevent anyone else from filling the gap,” a spokesperson said.

“Californians can breathe a sigh of relief that their state will be able to do its part to ensure fair access to the internet for all, at a time when we most need it.”

There’s still the possibility that the plaintiffs – ACA Connects, CTIA, NCTA and USTelecom – could appeal to the US Supreme Court.

In an emailed statement, the organizations told us, “We’re disappointed and will review our options. Once again, a piecemeal approach to this issue is untenable and Congress should codify national rules for an open Internet once and for all.” ®

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RCSI scientists find potential treatment for secondary breast cancer

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An existing drug called PARP inhibitor can be used to exploit a vulnerability in the way breast cancer cells repair their DNA, preventing spread to the brain.

For a long time, there have been limited treatment options for patients with breast cancer that has spread to the brain, sometimes leaving them with just months to live. But scientists at the Royal College of Surgeons Ireland (RCSI) have found a potential treatment using existing drugs.

By tracking the development of tumours from diagnosis to their spread to the brain, a team of researchers at RCSI University of Medicine and Health Sciences and the Beaumont RCSI Cancer Centre found a previously unknown vulnerability in the way the tumours repair their DNA.

An existing kind of drug known as a PARP inhibitor, often used to treat heritable cancers, can prevent cancer cells from repairing their DNA because of this vulnerability, culminating in the cells dying and the patient being rid of the cancer.

Prof Leonie Young, principal investigator of the RCSI study, said that breast cancer research focused on expanding treatment options for patients whose disease has spread to the brain is urgently needed to save the lives of those living with the disease.

“Our study represents an important development in getting one step closer to a potential treatment for patients with this devastating complication of breast cancer,” she said of the study, which was published in the journal Nature Communications.

Deaths caused by breast cancer are often a result of treatment relapses which lead to tumours spreading to other parts of the body, a condition known as secondary or metastatic breast cancer. This kind of cancer is particularly aggressive and lethal when it spreads to the brain.

The study was funded by Breast Cancer Ireland with support from Breast Cancer Now and Science Foundation Ireland.

It was carried out as an international collaboration with the Mayo Clinic and the University of Pittsburgh in the US. Apart from Prof Young, the other RCSI researchers were Dr Nicola Cosgrove, Dr Damir Varešlija and Prof Arnold Hill.

“By uncovering these new vulnerabilities in DNA pathways in brain metastasis, our research opens up the possibility of novel treatment strategies for patients who previously had limited targeted therapy options”, said Dr Varešlija.

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