Employment status issues: are you employed or self-employed?

Contractors have an obligation to decide if their workers are employed or self-employed.

Each contract must be taken on its own. A worker may be self-employed in one contract and employed under the next contract. Being registered as a CIS subcontractor doesn’t mean that you will automatically be self-employed for all your work in the construction industry.

Normally the contractor will face a big tax bill if HMRC decides that the contractor’s workers are employee and not subcontractors. The contractor will therefore need to make this decision themselves.

There is more guidance on this issue at http://www.hmrc.gov.uk/cis/intro/con-or-sub.htm#3