Procedural aspects of status cases: actual cases - what to do when you have formed an opinion
When you have formed an opinion as to the status of the worker, you should normally notify both the engager and the worker in writing. Exceptionally, it may be appropriate to notify only one party. For example, where a dispute with an engager involves many workers or where one party cannot be traced.
Remember that at this stage this only represents your informal opinion of the status. But although this opinion is informal, HMRC will be bound by it if it is not disputed. Your opinion will apply for both NICs and tax purposes unless you make it clear that it applies for only one or the other.
From a NICs perspective, a worker’s NI contributory benefit entitlement is affected by the class of contribution which they pay and this is determined by their status. In addition, if the worker is or is to be treated as an employee, the engager will become liable to account for primary and secondary Class 1 NICs. From a tax perspective the worker’s tax liability may vary depending on whether they are assessable under Schedule E/on employment income or under Schedule D/on trade profits. So it is important that you review the case in sufficient detail to satisfy yourself that you have reached the correct conclusion.