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The level of investment, financial risk and the opportunity to profit is seen as a key area in determining employment status. Employees do not usually need to risk their own capital¹. The greater the financial risk, the stronger the indication of self-employment. Individuals who risk their own money, for example by buying assets, bearing their own running costs, paying for overheads and materials are considered by HMRC likely to be self-employed. Investment in obtaining training for an engagement is also potentially significant (HMRC discuss this in terms of cash outlay, but arguably cost through lost working time also applies)².

The essence of being in business is being in control of financial decisions; this creates the opportunity to balance risk and reward and the ability to benefit from operational efficiencies. All of these are denied to employees, who, although they may be able to benefit to a small extent from production bonuses and the like, are essentially not operating at their own financial risk or for their own financial