Haulage operators are coming under close scrutiny by HM Revenue & Customs (HMRC) in relation to the employment status of their drivers.
This is an extract from a letter sent by HMRC to the Road Haulage Association (RHA) recently:
Employment Status and Tax
HM Revenue & Customs are concerned by increasing pressure on haulage operators to wrongly treat workers as self-employed, or to hire workers through their own companies – in ways that are not compliant with tax laws. Haulage companies and workers are being sold schemes that are very aggressive and that 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.’
The letter goes on to say:
‘An area of particular concern has been the marketing of ‘own companies’ as a way to avoid tax. 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. 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.’
Richard Burnett, the chief executive of the RHA, commented “Our concerns are for the health of the UK haulage sector. It is coming under increasing pressure to break the rules and hauliers who may inadvertently be paying drivers off payroll may face a heavy claim for back tax and penalties of up to 70% of the tax and NI arising. Also, individual drivers could face bankruptcy if they evade tax payments and then HMRC enforces its rules.”
Last month, HMRC published the latest edition of Spotlight. Spotlight 32 covers this particular topic and the outcome of a related First-tier Tribunal decision in the case of Christianuyi Ltd & Ors v Revenue and Customs UKFTT 272 (TC).
Abbey Tax employs two specialists in this area. Jacqui Mann and Nigel Nordone are both former HMRC Inspectors who can be contacted for further advice on this subject. Jacqui’s email is email@example.com and Nigel’s email is firstname.lastname@example.org
Author: Guy Smith, Tax Investigations Manager, Abbey Tax