Southampton-based Andy Transport has been given 14 days to prove it is using self-employed drivers legally, or face having its O-licence curtailed.
The operator was given the ultimatum by West of England traffic commissioner (TC) Kevin Rooney, after an audit found it was subcontracting work to self-employed drivers.
Drivers had set up their own companies and invoiced Andy Transport for the work they had carried out.
The Office of the Traffic Commissioner wrote to the company asking it to explain how it met the requirements of HMRC’s IR35 legislation, which concerns tax and national insurance contributions for anyone who is contracted to work for a client.
Andy Transport claimed the drivers were registered as self-employed and were responsible for tax and national insurance contributions themselves.
Rooney found the haulier had not sought legal advice before it attended a public inquiry earlier this month, and gave it 14 days to prove the current employment arrangements were legal, or have its O-licence curtailed from three vehicles to one.
The TC said its evidence should include relevant case law and proof drivers are directly employed, if that is the arrangement in place.
It has until today (18 May) to provide the evidence.
The RHA last year warned that drivers were increasingly being paid as subcontractors, despite being classified as employees. It said this allowed the operator and driver to avoid income tax and drivers’ employment rights.