Subcontractor
Or Employee?

Why this matters more than it looks like it should

Calling someone a self-employed subcontractor doesn't make them one. HMRC looks at how the work actually happens, and if they decide someone was really an employee all along, the bill lands on you, backdated PAYE, employer National Insurance, and penalties, often for every year you got it wrong.

This is exactly the kind of thing that surfaces in a CIS compliance check, and it's one of the more common triggers for one.

What HMRC actually looks at

• ControlDo you tell them how, when, and where to do the work, or do they decide that themselves and just deliver the result?
• SubstitutionCould they genuinely send someone else to do the job in their place? A real right of substitution is one of the strongest signals of self-employment.
• Equipment and toolsDo they turn up with their own tools and materials, or are you providing everything?
• Financial riskDo they quote for jobs and wear the cost if it overruns, or are they simply paid for time worked regardless of outcome?
• Exclusivity and patternDo they work for other people too, or are they effectively working full-time, only for you, indefinitely? The more it looks like a regular job, the more it looks like employment.

No single factor decides it on its own, HMRC weighs the whole picture. But someone working set hours, using your tools, taking instructions on how to do the job, and working only for you, for months on end, is going to look like an employee no matter what the paperwork says.

CIS doesn't settle the question

This is the bit that catches people out. Registering someone under CIS and deducting the right percentage doesn't prove they're genuinely self-employed, CIS is a tax deduction mechanism, not an employment status test. You can operate CIS correctly on someone HMRC would still consider an employee, and still end up liable.