ESM11090 - Check Employment Status For Tax: Financial Risk - Equipment Costs

CEST asks ‘Will the worker have to buy equipment before your organisation pays them?’ or

‘Will you have to buy equipment before your client pays you?’

For further guidance on equipment costs see ESM0540.

If a worker buys specialist tools and items which are fundamental to doing the work and the hirer will not supply these, this would fall within the ‘Yes’ category for CEST. The equipment should require a significant investment by the worker. Low cost tools or items would not fall within the ‘Yes’ category.

If a worker does not buy costly equipment, the hirer provides the equipment, the worker supplies equipment purely for preference or the worker uses equipment that they bought for personal reasons, this would fall within the ‘No’ category for CEST.

EXAMPLES

• Nikki is a TV presenter working through her PSC. The broadcaster provides all the equipment needed for the task. Nikki brings her own earpiece as she prefers her own rather than using the broadcaster’s. Any cost would not be a financial risk as the broadcaster would have supplied the earpiece in the absence of Nikki’s. HMRC would not regard this expense as equipment costs.
• Vince is a sports photographer. He is required to bring his own specialised professional equipment. The camera, lenses, tripods and photography software cost over £20k. The hirer will not provide this equipment and it was not bought for personal use. This is financial risk as it is high value and specialist equipment.
• Ahmed is required to buy a particular type of laptop for a contract. The hirer makes no contribution to the cost of this laptop and tightly controls what it can be used for. This is not a choice for the worker and the contract cannot be fulfilled without it. As this is not for personal use Ahmed has no choice but to purchase it. The laptop is fundamental to doing the task and the worker gets no financial support from the hirer to purchase it. The cost of the laptop therefore represents a financial risk. If the hirer buys the laptop back at the end of the contract this would then not be a financial risk as the worker is being reimbursed.
• Clyde is a news presenter for the local news station. The news station does not require Clyde to supply anything to enable him to perform the role. Clyde buys a laptop in addition to a personal one he already owns so he can do some research on other news stations and the news they are publishing. He believes this will improve his current affairs knowledge and make his job easier. This is not financial risk as Clyde did not need this laptop to perform his role, he bought it through choice and it was not fundamental to the task.