Check driver employment status, warn solicitors

Driving a truck

Operators should consider checking the employment status of their drivers and ensure they are not avoiding paying tax by hiding behind a self-employed status, according to law experts at Shulmans LLP.

Following the senior traffic commissioner (TC)’s recent update of statutory guidance relating to employment status, partner Jim Wright and road transport specialist Richard Wadkin warned that TCs are likely to refer companies to HMRC if they are suspicious.

They said HMRC is concerned that drivers are claiming to be self-employed when they are not: “Despite changes to the tax regime since 2015, being self-employed still provides a taxable benefit, as opposed to being an employee.

“Sometimes this taxable benefit is split between the O-licence holder, by way of a lower rate of pay to the driver, or to the benefit of the driver. In either instance, however, HMRC sees that the use of so-called self-employed drivers creates a loss of tax revenue.”

The senior TC’s statutory document number 5 states that it will be “rare” for a driver to be genuinely self-employed, unless they are an owner-driver.

HMRC FINES

Wright and Wadkin said flouting the rules could mean an operator is not of good repute and may lose its licence. It could also be hit by costly fines from HMRC: “Prudent transport managers and O-licence holders may therefore wish to consider undertaking an audit and identifying any driver, who is not an owner-driver, and for whom PAYE is not operated in full.

“It should also be noted that the audit mentioned above needs to include all driver labour inputs, including where the drivers are supplied via a third party such as a temporary labour provider or agency.”

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