CEST Updates and MTD Multiple Agent Challenges

Spotlight on Recent Tax Policy Moves

Tax professionals have much to consider following recent updates to two major HMRC initiatives: the Check Employment Status for Tax (CEST) tool and Making Tax Digital (MTD) for Income Tax. These updates, unveiled in June 2025, are influencing workflows and raising pivotal questions across accounting practices.

CEST Tool: Minor Tweaks Amid High Expectations

After a long wait since 2019, the accounting profession anticipated substantive modifications to the CEST tool to reflect evolving employment scenarios. While hopes were high for a comprehensive overhaul, the latest updates have been incremental rather than transformative:

• CEST’s assessment logic remains largely unchanged, with most questions and decision paths familiar to regular users.
• Minor clarifications and improved guidance aim to make the process of determining employment status slightly more user-friendly.
• Key user concerns—such as edge cases and ambiguous contract types—are still not fully addressed, prompting cautious engagement from tax advisors.

In summary:

“Many professionals find the updated CEST falls short of delivering the clarity and reliability needed for complex modern arrangements.”

Making Tax Digital: The Multi-Agent Model’s Complexities

HMRC’s introduction of a new two-tier agent model for MTD is designed to allow multiple agents to support different aspects of a taxpayer’s affairs. On paper, the premise is straightforward. In practice, numerous complications quickly arise, particularly for clients with diversified property holdings or multi-agent setups.

How the Two-Tier Agency Works

1. Main Agent: Oversees the client’s comprehensive tax position and takes responsibility for final filings.

2. Supplementary Agents: Appointed for specific tasks (such as maintaining digital records for individual property businesses or generating quarterly updates for distinct income streams).

Principal Challenges Emerging

Tax practitioners have identified several key problems:
• Digital Record Management: HMRC requires separate digital records for UK and foreign property businesses, but all UK properties are aggregated for reporting. This means:
• Each managing agent may maintain records only for their assigned properties.
• There is no direct mapping between data entry and overall submission obligations.
• Data Consolidation: If multiple agents track different properties, aggregating data digitally for a single quarterly update (QU) can become inefficient and error-prone.
• Accountability and Communication: Coordinating responsibilities between the main agent, property agents, and the taxpayer risks:
• Missed or misunderstood communication.
• Disputes over who holds ultimate accountability for a complete, compliant return.

Real-World Concerns from Practitioners

Feedback from practitioners on these changes highlights unresolved practicalities:
• "If I have two UK properties with two separate agents, but need to file a combined quarterly update, how do I maintain a digital audit trail from first entry to final submission?"
• "The new system is not yet ready for the complexity of real property businesses, leaving agents and taxpayers vulnerable to missteps."

The Road Ahead: How Should Professionals Respond?

While it is clear that HMRC is working to modernize the UK tax system, professionals should prepare for ongoing uncertainty.

Key Actions to Consider:

• Conduct a thorough review of client portfolios to identify multi-agent risks or fragmented recordkeeping.
• Invest in digital systems that facilitate data sharing and consolidate inputs from multiple agents.
• Proactively communicate with clients and collaborating agents to set expectations around roles, responsibilities, and potential gaps.
• Monitor for further HMRC guidance and software updates, as practical issues are likely to prompt additional clarifications.

Stay Ready for Change

There is no doubt: navigating these regulatory shifts demands agility and close attention. Tax professionals who act early to streamline coordination and clarify workflows will be best placed to serve clients in this evolving environment.

Stay informed, communicate proactively, and ensure your team is equipped with the latest tools and guidance.