HMRC CEST Tool | make sure your salon or barbershop check is up to date
If you have self employed individuals in your salon or barbershop (for example chair renters or room renters, or even use contract staff), this is an important update from HMRC for you.
HMRC has just enhanced its CEST tool and published new guidance notes intended to provide users with greater clarity on the factors used to decide if someone really is self employed or not for tax and NIC purposes.
HMRC developed some time ago a tool which you can use to check whether anyone who you consider as self employed in your salon or barbershop, really would be considered the same by HMRC.
If HMRC considers a self-employed person to actually be employed, they can look to you as salon owner for PAYE and NI back pay, as well as possible fines.
The CEST tool has just been enhanced and includes more questions than the previous version, including:
- substitution: CEST uses a more sophisticated logic when asking questions on substitution;
- business on own account: questions are asked about how rather than just whether the contractor interacts with customers of the client, whether the contract is part of a wider series of contracts with the same client and the extent to which the contractor provides services to other clients; and
- provision of equipment: more detail is requested on the provision of equipment including specific questions on paying for materials, vehicles and other costs.
It also contains more links to HMRC guidance.
Salonfrog tried it
We’ve tried running it for a few scenarios specific to chair and room renters and often we got a result of ‘self employed’. However, the tool’s decision often sited the reason for this because “they will have to fund costs before your client pays you” and also in one of the critical questions there was no option to say that all the income was that of the self employed person and that they simply paid a flat rate rent to the salon.
Run it for each of your self employed people
We strongly recommend you run the tool for each of your self employed people as HMRC say they will stand by the tool’s decision! Once you run it, you have the option to save the results as a PDF, which you should do.