ESM11095 - Check Employment Status For Tax: Financial risk - Vehicle Costs

CEST asks ‘Will the worker have to fund any vehicle costs before your organisation pays them?’ or ‘Will you have to fund any vehicle costs before your client pays you?’

If a worker must acquire a vehicle specifically for providing services, this could be bought, leased or through loans, then this would fall with the ‘Yes’ category for CEST.

If a worker incurs significant extra cost for using the vehicle specifically to perform the duties of the contract, this would fall within the ‘Yes’ category for CEST. This could be running costs for example. For insurance to count as an extra cost, a worker would need to purchase a materially more expensive policy that was significant in comparison to their income and was required to perform the duties of the contract.

If a worker already owned a car, gets another out of preference, is given money for it by the hirer or simply commutes to work, then this is the ‘No’ category for CEST.

EXAMPLE

Dave is a travelling salesman for a security company. He drives to each customer.

• If the company requires Dave to drive and requires Dave to buy a particular car to maintain company image which he uses his own money for without company contributions, this would be financial risk.
• If Dave uses his own personal car and the company gives Dave money for mileage and running costs, this is not financial risk.
• If Dave is not required to buy additional insurance and can drive on the policy he already had personally, then the cost of the insurance is not financial risk.
• If Dave drives to the company offices in his personal car and then uses a company car to travel to customers, this is not financial risk. This is ordinary commuting and not business travel.
• If Dave has a personal car he could use but chooses to buy another car for this task, the cost of the new car is not financial risk. Dave was not required to buy a new car and did so out of choice, so it is not fundamental to the task.