Myth-busting on lorry driver employment tax

23rd May 2016

The Road Haulage Association has been myth-busting in a campaign to improve compliance with tax law relating to lorry drivers.

RHA members have been alarmed at a growth in tax evasion and the increasing market pressure on firms to break HMRC rules.

Various ploys are being used by which lorry drivers are said to be “self-employed”. That is fine for genuine owner-drivers, who have their own operating licence and haulage business – but anyone driving a lorry for another company cannot be self-employed.

“Some firms and drivers know they are breaking the law, others perhaps are less sure,” says RHA director of policy Jack Semple. “Various organisations and driver agencies have been promoting schemes that are unlawful.

“One myth is that you can set up a personal service company and think that allows you to be a self-employed lorry driver for other people. It doesn’t. Another myth is that if you drive for several firms, not just one, you can be self-employed. The number of firms you drive for is irrelevant. The rule is that when you drive for another firm, or for a whole series of other firms, you have to be treated as an employee on all occasions.

“The scams hit hauliers who are complying with the law by paying the taxes due – and of course funding schools and hospitals – by allowing them to be undercut on haulage rates; and also, compliant firms may lose drivers, which in the current driver shortage can mean losing work. We have a very strong member mandate, especially from our SME members, to work to reverse the trend towards illegality.

“The scams also build up risk for the companies, including agencies, and the drivers breaking the rules. HMRC is tightening enforcement across the economy and is well aware of what is happening in haulage and logistics, and will impose back-tax and penalties. As HMRC says in its letter on our website, ‘a lot of our work is in private so you may not have heard about it’. (To see the letter, visit www.rha.uk.net<http://www.rha.uk.net> and search: HMRC)

“Drivers themselves can end up as victims, either through being caught by HMRC or by losing employment rights, as they are billed – illegally – as self-employed. But hauliers could find that they are subject to claims under employment laws in any case, as the self-employment status is bogus.”

The RHA is supporting HMRC in its enforcement effort. It recently presented on the subject in the House of Commons, at a meeting of the All-Party Parliamentary Group on Freight Transport, and has highlighted the HMRC rules at a series of member briefings around the country.

-ENDS-