Buzzing About HR
Buzzing About HR by https://www.kateunderwoodhr.co.uk is the go-to podcast for anyone looking to make their workplace better. Hosted by HR expert Kate Underwood, each episode dives into the latest HR trends, essential tools, and practical strategies to help businesses of all sizes navigate the ever-evolving world of work. From improving employee engagement to tackling real-world HR challenges, Kate shares actionable advice you can implement right away. Whether you're an HR professional, a business owner, or someone passionate about people, this podcast will keep you ahead of the curve and buzzing with ideas to drive success in your workplace.
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The Reality Check Your Business Needs Before Hiring Your Next Freelancer
Have you ever hired someone who invoices monthly, works regular hours, and calls themselves a freelancer? That seemingly straightforward arrangement might be putting your business at serious financial risk. I'm shedding light on the murky world of employment status and why getting it wrong could lead to eye-watering tax bills and tribunal nightmares.
Walking through the New Forest with my dog one morning, I received a simple client question about a freelance designer that sparked this vital conversation. The truth is, labels like "freelancer" mean nothing if the working reality suggests employment. HMRC doesn't care what's written on paper—they care about how the relationship actually functions day-to-day.
This isn't just theoretical. TV presenter Adrian Chilles faced a £1.7 million claim from HMRC despite invoicing through his limited company. Kay Adams endured multiple tribunal rounds defending her freelance status with the BBC. Even Premier League referees have been caught in this web. The message is clear: no business is too small for HMRC scrutiny when it comes to disguised employment.
I've developed a five-step freelancer sanity check that could save your business thousands: use the HMRC CEST tool and document the results; look beyond contracts to assess control and substitution rights; examine whether mutual obligation exists; review how long they've been with you; and avoid questionable tax schemes. Remember my buzzword: status is not static. A genuine freelance relationship can evolve into employment over time if you're not vigilant.
The smart businesses I work with implement regular checks—like reviewing any freelancer doing more than 10 hours weekly every three months—and aren't afraid to reclassify when necessary. Getting this right isn't just about avoiding HMRC problems; it's about treating people fairly and sleeping easier at night. Need help reviewing your freelancer arrangements? Reach out at kate@underwoodhr.co.uk or connect with me on LinkedIn before that innocent-looking freelance relationship becomes an expensive headache.
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Until next time, keep buzzing and take care of your people!
Picture this it's just after 7am on the morning of the 1st of July 2025 and I'm out on a dog walk with H, our office wellbeing officer, part-time squirrel chaser and freelance cheese consultant. We're meandering along one of our favourite trails in the New Forest. The weather is that perfect early summer combo Mild sunshine, high teens, a gentle breeze. My phone's buzzing in one pocket, I've got a lukewarm coffee in the other hand, and H is happily bouncing ahead, tail up, nose twitching and then ping a voice note from a client Kate, quick question. We've got a freelance designer. She invoices us monthly, works regular hours every week. That's fine, right? Just as I'm about to reply, h stops, turns and gives me that. Look the one that says Mum, that sounds suspiciously like payroll with extra paperwork. She's got a point. Even if someone's invoicingicing, calling themselves freelance or working through a limited company, it's the reality of the working relationship that counts, not the label. So if you've ever hired a freelancer or are thinking about it and want to avoid surprise hmrc bills and tribunal risks, stick around. By the end this episode, you'll know when a freelancer might actually be an employee, how HMRC decides these things and what steps you can take right now to protect your business.
Speaker 1:Welcome back. I'm Kate Underwood, hr consultant, workplace translator and general champion of stress-free compliance. You're listening to Buzzing About HR, the podcast for small business owners, people managers and the accidental HR person who's just trying to keep it together. Let's get stuck in Part one why status matters. So why does this freelancer versus employee thing even matter? Because if you get it wrong, the consequences aren't just awkward, they can be expensive. We're talking backdated income tax, employers, national insurance contributions, interest penalties and potentially a public tribunal if it all goes horribly wrong. Now, most small businesses don't fall under the off payroll working rules, also known as IR35 for large companies, but that doesn't mean HMRC won't come knocking. If someone is working like an employee, hmrc can still reclassify them, even if they invoice you and call themselves freelance.
Speaker 1:The law looks at the working arrangement, not the paperwork. Part two real-life examples. That should make you sit up. Let's take a look at a few real-world examples just to give this some punch. Adrian Chilles, the TV and radio presenter, faced a claim from HMRC for nearly £1.7 million in back tax and NICs. Why? Because, despite invoicing through a limited company, hmrc argued that the way he worked with broadcasters looked more like employment. Kay Adams went through multiple tribunal rounds defending her freelance status with the BBC. She eventually won, but only after a huge legal and emotional battle, and most small businesses wouldn't have the time or budget for that. Even Premier League referees were dragged into this in 2023. Despite working through companies, tribunals had to decide whether they were really just employees in disguise. The point is, this isn't just about celebrities or massive organisations. Hmrc is using these cases to tighten up everywhere.
Speaker 1:Part 3. So how do you get it right? Here's your five-step freelancer sanity check. Step 1. Use the HMRC CEST tool, that's Check Employment Status for tax. It's free, updated regularly and gives you a status determination at the end. Document it and keep it on file.
Speaker 1:Step two look beyond the contract. Is the freelancer genuinely in control of how and when they work? Can they send someone else in their place? Are you treating them like part of the team? Step three think about mutual obligation. Are you committed to giving them work each week and are they committed to turning up? That's a red flag. Step four check how long they've been with you. If they've been working regular hours for more than six months, hmrc may say they're an employee, regardless of invoices. Step five Avoid disguised remuneration schemes. If it looks dodgy, smells dodgy or promises to save tax in a way that makes your accountant frown, walk away.
Speaker 1:Part four myth busting and mini dramas. Let's bust a few myths. Myth one they invoice, so they must be self-employed. Nope, not if they work regular hours under your control. Myth two they have a limited company, so IR35 doesn't apply. That only helps in certain scenarios. If you're the engager, you still need to check status. Mini-drama One of my clients once hired a VA through her own company.
Speaker 1:After a year of nine to five hours in team meetings, hmrc reclassified her as an employee. The client ended up paying backdated employers NIC and got a slap on the wrist. It was avoidable. All it took was a quick status review six months in Part 5. Listener Q&A.
Speaker 1:Here are a few recent questions from you lot Q Am I responsible if the freelancer has their own company? A. If you're a small business, technically they determine their own status, but HMRC may still challenge it if it walks like a duck and quacks like payroll. Q Do I have to run the CESS tool for every freelancer? A. It's not a legal requirement but it's a very good idea, especially if they're working regularly or doing set hours. Q what if we realise too late that we've misclassified someone? A Get advice, run a proper audit and correct it going forward. A Get advice, run a proper audit and correct it going forward. Hmrc tends to be gentler with proactive businesses who spot and fix their own mistakes.
Speaker 1:Part 6. Buzzword of the day. Today's buzzword is status is not static. Just because someone was freelance three months ago does not mean they still are now. Check in, review, update your CEST, especially if scope or hours change. Part seven when employers get this right.
Speaker 1:One of my clients, an events company, has a simple rule Any freelancer doing more than 10 hours per week gets a CESS check logged and reviewed every three months. Another switched a long-standing freelancer to a zero-hours contract. Why? Because they were clearly operating like an employee. No drama, no fuss, just a smart, proactive move. No drama, no fuss, just a smart, proactive move. Both have avoided nasty surprises and their teams know exactly where they stand. Final thoughts Getting freelancer status right is not just a tax thing.
Speaker 1:It's about protecting your business, treating people fairly and sleeping a bit easier at night. If you need help reviewing contracts, running cess checks, or just want someone to give your freelancer agreements a once over, I can help. Drop me a line at kateunderwoodhrcouk or send me a message on LinkedIn. Let's keep things fair, simple and off the HMRC radar. That's all for today's episode of Buzzing About HR. If you found it helpful, share it with a fellow small business owner, leave a review or tag me in your next panic turn sorted HR moment. Until next time, stay compliant, stay calm and maybe give your freelancers a friendly double check. Bye for now.
