A recent tax case could prove key when using CEST.
Check Employment Status for Tax (CEST) is a tool from HMRC to determine if an individual, or a worker on a specific engagement, should be classed as employed or self-employed for tax purposes.
Documentation will be key as businesses continue to assess services provided to them by self-employed individuals. In addition, when taking clients through CEST, you may, when talking with individuals providing services through a PSC, remind them of the case of George Mantides Ltd v HMRC  TC07202.
Similar services were supplied to Royal Berkshire Hospital (RBH) and Medway Maritime Hospital (MMH) with only one being regarded as self-employment. The case highlights the importance of mutuality, substitution and control and how agreements, correspondence and actions are important when considering if the ‘balance lies on the side of self-employment’.
‘In my judgement the hypothetical contract between MMH and Mr Mantides would have contained the following terms:
it would have been for a fixed term
it would be terminable early on one day's notice on either side
it would be for the personal services of Mr Mantides to work as a urologist grade SpR, but permit a substitute to undertake the work if the agency, after consultation with the hospital (in which consultation the hospital had no veto) considered that the substitute was suitable on the basis of the hospital’s usual criteria. (I do not consider that the warranty in clause 13.7 of the agreement between MMH and GML that the substitute be a director of the company can be reflected in the notional contract)
it would require Mr Mantides (or the substitute) to conduct the services notified to him by the weekly rota in the facilities provided by the hospital
it would require Mr Mantides (or the substitute) to be available for 10 half day sessions in each week
MMH would have no obligation to provide, or try to provide, any sessions in a week. The contract between MMH and GML contained no such obligation and its absence in that formal written contract indicates to me that it should be absent from the notional contract
MMH would pay Mr Mantides the agreed rates per hour worked
Mr Mantides would attend the morbidity and mortality meetings. I so conclude for the same reasons as I gave in relation to the RBH contract
There would be no entitlement to holiday pay, sickness pay or pension benefits
Travelling time between the hospital’s sites would be paid by MMH. Other travel and accommodation expenses would not be paid.
Had Mr Mantides worked under such a contract would he, in the circumstances, have been an employee?
The circumstances of Mr Mantides's work for MMH differ in three material respects from those of his work for RBH:
under the notional contract with MMH Mantides would have a right to send a substitute if that substitute was approved by the agency. This right would not in my view be illusory: it could have been exercised and taken effect, and although its counterpart in reality was not exercised its existence would be a relevant pointer away from employment. The qualified nature of the right, and the fact that Mr Best's evidence indicated that the hospital might have resisted its exercise convinced me that the contract could, just, be described as one for Mr Mantides's personal service, but the existence of the right points away from employment
the notional contract with MMH could be terminated on one day's notice. Whereas I found that at least a week’s notice that had to be given under the RBH contract, one day's notice is almost illusory and does not point to employment
the notional contract with MMH would have contained no obligation on MMH to try to provide either 371⁄2 hours or 10 half day sessions in a week. There would not have been even a qualified obligation to provide work. That points away from employment.
In other respects, the circumstances of the MMH engagement would be the same as those of the RBH engagement, and I reach the same conclusion as to the import of the other relevant factors as I do in relation to RBH. But standing back and looking at those factors together with the three noted above I find that the balance lies on the side of self-employment (both as regards the income tax and the NI tests).’