ESM11090 - Check Employment Status For Tax: Financial Risk - Equipment Costs

CEST asks ‘Will the worker have to buy equipment before your organisation pays them?’ or‘Will you have to buy equipment before your client pays you?’


We ask this question to see if you have significant financial risk from equipment costs. If that could result in you making a loss from the contract, this would be an indication of self-employment.

For further guidance on the financial risk questions see ESM11085 and for further guidance on equipment costs see ESM0540.

If a worker buys specialist tools and items which are fundamental to doing the work and the hirer will not supply these, this falls within the ‘Yes’ category for CEST. The equipment should require a significant investment by the worker. Low-cost tools or items do not fall within the ‘Yes’ category.

If a worker does not buy costly equipment, the hirer provides the equipment, the worker supplies equipment purely for preference or the worker uses equipment that they bought for personal reasons, this falls within the ‘No’ category for CEST.

EXAMPLES
  • Nikki works through her Personal Service Company. She is provided with an earpiece by the hirer which is essential for the task. Nikki brings her own earpiece to use as she prefers her own. Any cost would not be financial risk as the hirer supplied the equipment required and Nikki uses her own earpiece out of preference.
  • Vince works through his Personal Service Company. For a particular engagement he is required to acquire his own specialised professional equipment that costs over £20,000. This is a significant amount in relation to the contract value. The hirer will not provide this equipment and it was not bought for personal use. This is genuine financial risk. Vince has invested significantly by supplying the equipment necessary to complete the engagement.
  • Ahmed is required to provide a specific piece of equipment for a particular contract. The equipment is high value in relation to the contract. The contract could not be completed without this equipment. The hirer makes no contribution to the cost of this essential equipment and tightly controls what it can be used for. The item was not purchased for personal use. Therefore, the cost of the equipment represents a genuine financial risk.  
  • Clyde is engaged to provide work for a hirer. All the necessary equipment to undertake the task is provided for Clyde. Clyde decides he wants to purchase additional non-essential equipment to make his job easier. This is not financial risk; all the necessary equipment was already provided for Clyde. The decision to purchase and use additional equipment was one of personal choice, to make the task easier for Clyde. It was not necessary to incur this expense to fulfil the contractual terms.
  • Debbie is required to buy equipment to complete her contract. She has an agreement that the hirer buys back the equipment purchased at the end of the contract, this would not be a financial risk as the worker is being reimbursed.