Using CEST and drafting for self-employed status

Businesses engaging consultants and contractors want two things that pull in different directions: a signed document that says the person is self-employed, and certainty that HMRC and a tribunal will agree. The document can be drafted to reflect a self-employed engagement, and it should be, because a contract that describes employment is evidence of employment; but status is decided on how the engagement works in practice, HMRC's Check Employment Status for Tax tool is a way of testing those facts, and no agreement guarantees the outcome. This page explains the tests, the tool and the drafting. I draft consultancy and contractor agreements for a fixed fee of £595, delivered in five working days.

Who this is for

Businesses in England and Wales engaging consultants, contractors and freelancers and wanting to understand how status is decided and what the agreement can do about it, and self-employed people who want to know where they stand.

How status is decided and what the agreement does

The tests the courts apply

Whether someone is an employee, a worker or self-employed under section 230 of the Employment Rights Act 1996, and whether an engagement is employment for tax, turns on the facts of how the work is done rather than on the label: whether the individual must do the work personally or may send a substitute, whether the business controls what is done, how, when and where, whether there is an obligation to offer work and to accept it, and whether the individual is in business on their own account (their own equipment, several clients, financial risk, the opportunity to profit) or integrated into the business like its staff. A tribunal and HMRC disregard contract terms that do not reflect reality.

What CEST asks and how to use it

HMRC's Check Employment Status for Tax tool asks a series of questions about the engagement (substitution, control over the work, financial risk, how the worker is paid, their other work, whether they are integrated into the business) and gives an outcome HMRC will stand behind if the answers were accurate and the tool was used as intended. It is used engagement by engagement, before the work starts and again if the arrangements change, answered on the basis of what will happen in practice rather than what the contract says, and the outcome and the answers should be kept; an outcome obtained by answering with the contract's words rather than the facts is not one HMRC will honour.

The clauses that reflect self-employment

A consultancy agreement drafted to reflect a self-employed engagement describes the arrangement the parties intend to run: the consultant's company as the contracting party where there is one, defined services or deliverables rather than a role, the consultant's control over how, when and where the work is done within the client's reasonable requirements, a right to send a suitably qualified substitute at the consultant's cost, the consultant's own equipment and insurance, no obligation on the client to offer further work and none on the consultant to accept it, payment against invoices for work done, no employee benefits and no place in the client's management processes, and the consultant's freedom to work for others.

The clauses that undermine it

A substitution clause the client would never accept, a right of the client to reject substitutes at will, set hours and a line manager, the client's disciplinary and performance procedures, holiday pay by another name, a fixed monthly fee for attendance rather than for services, exclusivity, a restriction on working for others during the engagement, an indefinite term, and the consultant's email address, business cards and desk at the client all point the other way, and an agreement that contains them alongside a self-employment label is evidence that the label is wrong; the drafting removes them where the parties can live without them and leaves them out of the label where they cannot.

The off-payroll rules and who determines status

Where a consultant works through their own company, Chapter 10 of Part 2 of the Income Tax (Earnings and Pensions) Act 2003 requires a medium or large client to determine whether the engagement would be employment if the consultant were engaged directly, to issue a status determination statement with reasons, to operate a disagreement process, and, where the engagement is inside, to have the fee-payer deduct tax and national insurance; a small client leaves the assessment with the consultant's company under Chapter 8. The agreement should say which applies, require the determination before work starts, provide for the rate or the engagement to change where the determination is inside, and allocate the cost of a determination that HMRC later disagrees with; the determination itself needs the accountants.

What no agreement can do

No consultancy agreement can make an employee self-employed, prevent a tribunal from finding that a worker was a worker, or guarantee the outcome of HMRC's tool, and a page that said otherwise would be misleading. What the agreement does is describe the self-employed engagement the parties intend, in terms that are consistent with the facts and the rights that follow from them, so that when the engagement is tested the document and the practice say the same thing; the rest is the business's conduct, checked case by case with HMRC's Check Employment Status for Tax tool, which is why I draft to reflect self-employment and do not guarantee any individual's status.

What it costs

Consultancy or contractor agreement, £595. Drafted for your business. Five working days.

Template set for repeat use, £895. One master agreement plus a short-form schedule you can reuse for every engagement. Five working days.

Buying online forms the engagement on payment. The scope is what the consultancy and contractor agreements page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• A clear, express assignment of intellectual property to your business
• Confidentiality provisions that protect your business information
• Restrictive covenants drafted at a scope a court will uphold
• Clear treatment of status, so the arrangement is not accidentally something else
• Payment, deliverables and termination provisions that match how you work
• A reusable structure, so the next engagement costs you nothing

What is not included

• Employment status determinations and off-payroll working assessments, which need your accountant
• Tax advice
• Disputes with a contractor you have already engaged
• Immigration and right to work compliance

Questions I am often asked

If CEST says self-employed, are we safe?

If the answers were accurate and the engagement runs as described, HMRC will stand behind the outcome. If the answers described the contract rather than the practice, or the practice changes, the outcome is worth little. The agreement is drafted so that the contract and the practice match.

Does a substitution clause settle status?

It is the single strongest factor, but only if the right is real: the client could not refuse without good reason and the consultant would pay the substitute. A clause both sides know will never be used is evidence against the consultant.

Can we have the agreement say self-employed and treat the person as staff?

You can, and it will be the document a tribunal reads to find that the person was staff. The agreement describes what the parties will do; the drafting and the practice have to agree.

Related guidance and services

• Consultancy and contractor agreements, £595, the service this page describes
• Contract review, £495
• Employment contracts and handbooks, £595
• Consultancy agreement versus employment contract: which one you need
• Substitution clauses in a contractor agreement

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: October 2026. Email geoffrey@caesar.co.uk.