ESM11025 - Check Employment Status For Tax: About you and the work

When completing CEST you should consider the true agreement between the parties. The starting point will usually be consideration of the written terms under which the hirer is contracting for a worker’s services. Consideration of working practices, what the parties have said to each other and the hirer’s own policies may also assist in completion of the questions.

Written terms may not provide a reliable indication of the true agreement between the parties where:

  • They are inconsistent with working practices;
  • They have been varied by verbal agreement;
  • They do not contain enough detail; or
  • They are inconsistent or contradictory.

Standard terms are often designed to achieve a particular employment status outcome. HMRC will not stand by a CEST determination which is the result of contrived arrangements.

Who you are

Your responsibility for determining employment status depends on a range of factors:

  • Where an individual is engaged directly, and not providing their services via an intermediary, CEST can help hirers and individuals understand the employment status of that engagement for tax and NIC purposes;
  • Where a worker is providing their services through an intermediary the off-payroll working rules need to be considered.
Important considerations where there is an intermediary
  • Where the hirer is a public authority, or is a medium or large-sized hirer outside of the public sector, as defined by Chapter 10, Part 2 Income Tax (Earnings and Pensions) Act 2003 (ITEPA), and engages individuals through an intermediary, it is the client’s responsibility to determine whether the off-payroll working rules apply to an engagement.
  • Where the hirer is not a public authority, or a medium or large-sized hirer outside of the public sector, the worker, through their intermediary, is responsible for determining the employment status for an engagement and whether the rules at Chapter 8, Part 2 ITEPA 2003 should apply.
  • Agencies who supply individuals working through intermediaries do not have a responsibility for determining the employment status of workers they provide but these organisations can still use CEST to help them understand the status of such workers. A CEST output could be used to support disagreements raised as part of the client-led status disagreement process under Chapter 10, Part 2 ITEPA 2003 (see ESM10015).