Making sure driver employment status is correct

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According to the Office of the Traffic Commissioner (OTC), the way that some drivers are employed in the haulage industry continues to cause problems for operators.

In a warning about getting driver employment status wrong, it points out that it is rare in road haulage for someone to be genuinely self-employed unless they are an owner-driver.

HM Revenue & Customs (HMRC) believes that some employers, in a number of sectors, are wrongly treating workers as self-employed or hiring them through their own companies.

These practices do not comply with tax laws, the OTC points out, and lead to unfair competition between operators as they may result in no National Insurance contributions (NICs) being paid.

It highlights that a business recently advertised for a new driver and received 31 applications of which 29 were from limited companies, which had been set up by drivers.

Self-employed or employed?

According to guidance from HMRC (GOV.UK website), in general, someone is self-employed if they are:

  • in business on their own account

  • bear the responsibility for the success or failure of that business.

Drivers are employed if they:

  • personally work under the control of their engager

  • do not run the risks of having the business themselves.

More information is available in Statutory Document No. 5 Legal Entities which can be found at assets.publishing.service.gov.uk and which explains the difference between sole traders, companies and partnerships.

Last reviewed 3 December 2018

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