HMRC fires warning to ‘self-employed’ drivers – Management CPC
Employers that use agency drivers who class themselves as self-employed or who are hired through ‘umbrella’ companies have been warned by HM Revenue and Customs (HMRC) that they could be breaking the rules, which could end up with employers facing substantial penalties.
Ridgeway Training – Management CPC
In correspondence between the Road Haulage Association and HMRV seen by Transport Operator, Mark Frampton, of the HMRC’s employment status policy department, warned that: Haulage companies and workers are being sold schemes that are very aggressive and they may not be told about tax (includes national insurance contributions) legislation that catches these schemes. This can lead to arrears of tax, interest and penalties.”
Mr Frampton continued to say: “In road haulage, it is rare for someone to be genuinely self-employed unless they are an owner-driver.
“Whether someone is employed or self-employed, is not a matter of choice but is determined by the particular terms and conditions under which a person works.
Running Risks – Ridgeway Training – Management CPC
He added: “Broadly, someone is self-employed if they are in business on their own account and bear the responsibility for the success or failure of that business. They will be employed if they personally work under the control of their engager, and do not run the risks of having a business themselves…
“We are finding evidence that haulage companies are sold the idea that they can set up, or have an agent set up companies for their workers and avoid tax.
Finally he added: “The companies and the workers appear to be unaware that there is legislation that may apply and allows HMRC to pursue workers, agents and the companies themselves. They could face investigation and significant tax bills. We think some companies are told, wrongly, that anti-avoidance legislation does not apply.
“In some cases, we think that the arrangements go further than simply avoidance and evasion can be involved.”
It appears that they may have been some action taken against some operators and their drivers already.
Responsibility and Control – Ridgeway Training Management CPC
HMRC allows self-employed status for owner-driver who work for one haulage company, an example being tipper and mixer ‘franchised haulers’, but this depends on the circumstances. An owner-driver must show a certain degree of control over their vehicles use. For example, the driver must be able to provide a suitable substitute driver for themselves, if they wish.
According to the internal employment manual, where the vehicle is leased from the same concern that the driver is working for, HMRC will look and the terms of the lease; and it is possible that the conditions below are likely to be required in order for a driver to be established as self-employed:
- The lessee has full responsibility, and total control of the vehicle during the period of the lease.
- The lessee is held responsible for any maintenance, insurance and fuel costs
- A commercial rent is paid that protects the investment of the lessor
- The driver is responsible for obtaining an operator’s license for the vehicle
An arrangement which allows the haulier to retain responsibility, as well as control of the vehicle, which enables it to be used by other drivers; if the vehicle is maintained, insured and duel by the haulier; or where the vehicle is paid for by a deduction from wages based on milage or hours of use, is unlikely to be classified as self-employed by HMRC.
Ridgeway Training – Management CPC
Thank you for reading the latest news from Ridgeway Training
