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HMRC Employment Status Check

HMRC are cracking down on the employment status of workers by issuing a letter to businesses titled ‘Checking the Employment Status of Your Subcontractors’ and it has been said that although they started with the NHS they are soon to move on to the agricultural industry.

These letters are asking businesses to review the status of all their sub-contractors and also decide whether they are being treated correctly as self-employed rather than employed. HMRC have a tool that businesses can use online called ‘Check Employment Status for Tax’ (CEST). It is requested that you do this within 30 days of receiving the letter. If you do not take any action before the deadline HMRC may issue a formal enquiry.

HMRC’s CEST toolkit may indicate that the majority of your subcontractors should be employed. Therefore you may need to undertake a more detailed review of your subcontractors if you think that the toolkit is too simplistic for your business. If it does mean that the status of your subcontractors should be changed, consideration needs to be taken as it will mean that HMRC could seek payment of PAYE and NIC for previous periods which would be the employers liability.

If you think that you have subcontractors which are at risk of having the incorrect status we would advise that you review these before receiving the letter. You can use the HMRC CEST tool kit or undertake a more complex review yourself. If you should receive a letter from HMRC please do not ignore it and take action as soon as possible.

The content of this article is for general information only and does not constitute tax advice. It should not be relied upon and action which could affect your business should not be taken without appropriate professional advice.

Written by Alice Gay ACCA ACIPP


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