Haulage operators are being warned that HM Revenue and Customs (HMRC) is intensifying its scrutiny of drivers' employment status, tachographs and allowances, potentially resulting in higher tax bills. Business advisory group Grant Thornton says it is witnessing HMRC take an increasingly hard-line approach towards operators following an overhaul of its haulage department.
Manager Kevin Buckett says hauliers using subcontractors on a regular or permanent basis could face particular scrutiny. "Where a person predominantly works for the same company or works for them all the time on a subcontractor basis, HMRC gets less money under PAYE than if they were full-time employees.
Partner Ian Carr says hauliers should expect a more focused review of their affairs by staff recently trained to spot pitfalls relevant to the industry. "Whereas in the past, haulier practices were reviewed but received little in the way of corrective action, HMRC is now focusing on proof of compliance much more than ever before," Carr says.
The influx of foreign drivers has become a risk, according to Grant Thornton, because HMRC staff view short-term workers from outside the UK as falling into the employee category, even if there is no formal contract. Changes to Managed Service Companies regulations mean hauliers could also be pursued under transfer of debt provisions for unpaid tax and NI contributions.
Carr says: "It is relatively easy to see why HMRC is focusing so heavily on employment status. The marginal National Insurance yield for an employee is close to three times the amount collected from the self-employed, and timing differences also ensure that HMRC receives both the tax and National Insurance earlier for employees."
The HMRC focus is not solely aimed at the haulage industry, but covers all industries that rely heavily on subcontractors. Buckett says some of Grant Thornton's clients have been given huge tax bills as a result of HMRC's stance: "One was as much as £100,000. And given the state of the haulage industry, most don't have that kind of cash available - so it could have some very serious consequences." An HMRC spokeswoman says the organisation has a range of compliance activities covering the area of employer and employee engagement looking for exploitation, evasion and avoidance.
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