Checklist of employment status factors

If HMRC decides that an individual contractor should have been treated as your employee, it will ask you to pay the tax and NI that should have been deducted from their pay through PAYE, plus the employers’ NI.  It’s important to have evidence to show how you decided an employee’s employment status.

Employed or self-employed?

Deciding if a worker is employed or self-employed isn’t easy. Neither employment nor self-employment are defined in legislation. However, there is a significant body of case law to help you decide. Our Checklist of Employment Status Factors lists the most important factors. Fill it out as part of your procedure for taking on a new worker. Keep it as evidence to show HMRC the reasons why you treated them as self-employed. Case law shows that it is not necessary to answer “yes” to all of the questions in order to demonstrate self-employed status.

You may only need one really strong indicator of self-employment to put the business into quite a safe position. Failing this, a number of weaker pointers towards self-employment coupled with the absence of any strong points against, should equally put you in a safe position. The main thing to bear in mind if ever faced by a status enquiry from HMRC is that it isn’t the sole arbiter of determining employment status and its view can certainly be challenged.