Potential tax avoidance among HGV drivers working as contractors features in the March issue of Trucking Magazine.
Trucking asked Junction Media to look into the issues surrounding HGV drivers working in a so called “self employed” capacity, following an extensive PR campaign by the Road Haulage Association in 2016 that highlighted concerns expressed by its members. In the article, which is published in the March edition of Trucking – out 3rd February – we use the term “contractor” rather than “self-employed” and take an in depth look into the definitions around employment status, IR35 legislation, how some HGV driving agencies are making more money out of drivers working for them either through their own limited companies, or through MSCs and umbrella companies, than those on PAYE.
An HM Revenue and Customs spokesman told us: “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. In road haulage, it is rare for someone to be genuinely self-employed unless they are an owner-driver. HMRC publishes detailed guidance to help people who want to get it right. The following sections explain how employment status rules operate in the haulage industry: ESM4210 and ESM4211. These rules apply to both full time roles and those who work on a less frequent basis.
“Individuals cannot be opted out of employment rights and protections simply by an engager calling them ‘self-employed’. That is decided on the reality of the working relationship. The government takes false self-employment very seriously, and is committed to taking strong action where companies, to reduce their costs, force their staff down routes which deny them the employment rights and benefits to which they are entitled.”
From our investigations it is clear that the rules and regulations are a minefield, with many grey areas that can easily lead to misconceptions. HMRC says it looks at all employment status cases on a case by case basis, but we conclude that most HGV drivers who work as contractors, either directly for hauliers or through agencies will be defined as being employed and therefore should be subject to PAYE and class one National Insurance contributions on their income from truck driving. While it is not illegal for drivers to work through their own limited companies or an MSC, their driving income should be treated as being within IR35 and if in any doubt they should seek professional financial advice. Sadly from our investigation, it appears that many drivers have not; and are unaware that what they are doing may be deemed as tax avoidance, and we believe it is highly likely that HMRC will look to bring a test case to court in the near future. In addition if driving is their full time occupation, they may be worse off financially than if they were engaged on a full PAYE contract.
You can read the full 2,500 word article in the March edition of Trucking Magazine.
