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No. CIS 340 states that for a contract to be within the scheme it must not be a contract of employment, which means the scheme assumes self-employment rather than establishing it. Registering a worker, verifying them with HMRC and deducting 20% does nothing to make them self-employed. Employment status is decided by common law principles, and HMRC's guidance is explicit that it is for the contractor to consider status when the subcontractor is first engaged, and that the fact someone has worked self-employed before is irrelevant — the terms of the particular engagement are what matter. A CIS deduction is a tax mechanism, not a legal determination.
Registering someone for CIS, verifying them with HMRC and deducting 20% does nothing whatsoever to establish that they are self-employed. CIS is a tax collection mechanism for payments made to subcontractors. Employment status is decided by the terms of the particular engagement — what the contract actually requires, and what happens in practice.
You can operate CIS perfectly and still have an employee.
You do. Where HMRC decides a subcontractor was actually an employee, the liability for the PAYE and National Insurance that should have been operated falls on the engager, with interest and penalties, and it is not recovered from the worker. The CIS already deducted is credited against it, but CIS at 20% is a long way short of PAYE plus both classes of National Insurance.
The highest-risk arrangement is the one that looks most convenient: a labour-only subcontractor who works only for you, on your sites, with your materials, on your hours, week after week.
This question is part of Employment status for subcontractors, which covers the whole area.
Send us three months of payment and deduction statements. We will tell you what is wrong, what it is costing, and whether gross payment status would fix it.