Monday 18 October 2021

HMRC fires warning shot on ‘self-employed’ drivers

27driverEmployers using agency drivers with self-employed status or who are hired through ‘umbrella’ companies have been warned by HM Revenue & Customs that they may well be breaking the rules, and could face substantial penalties.

In correspondence between HMRC and the Road Haulage Association seen by Transport Operator, Mark Frampton, of the HMRC’s employment status policy department, warned that: “Haulage companies and workers are being sold schemes that are very aggressive and 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.”

He continued: “In road haulage, it is rare for someone to be genuinely self-employed unless they are an owner-driver.

“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.

“Broadly, someone is self-employed if they are in business on their own account and bear the responsibility for the success or failure of that business. They will be employed if they personally work under the control of their engager, and do not run the risks of having a business themselves…

“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. We think some companies are told, wrongly, that anti-avoidance legislation does not apply.

“In some cases, we think that the arrangements go further than simply avoidance and evasion can be involved.”

The letter hints that action may already have been taken against some operators and their drivers.

“It is unfair that operators are being undercut by those who are not paying the right tax and we have been successfully targeting these schemes. Of course, a lot of our work is in private so you may not have heard about it.”

HMRC does allow self-employed status for owner-drivers who work mainly for one haulage company (tipper and mixer ‘franchised hauliers’ for example), but only in certain circumstances. The owner-driver has to demonstrate a degree of control over the vehicle’s use, and, for example, must be entitled to provide another driver as a substitute for himself if he wishes.

According to HMRC’s internal employment status manual, where the vehicle is leased from the same concern that the driver is working for, HMRC will examine the terms of the lease; and the following conditions are likely to be required to be met in order for a driver to be established as self-employed:

1)      The lessee has total control of, and responsibility for, the vehicle for the duration of the lease

2)      The lessee is responsible for the vehicle’s maintenance, insurance, and fuel

3)      A ‘commercial rent’ is paid protecting the investment of the lessor

4)      The driver is legally responsible for obtaining an operator’s licence for the vehicle

An arrangement which allows the haulier to retain control and responsibility for the vehicle, enabling it to be used by other drivers; where the vehicle is maintained, fueled and insured by the haulier; or where the vehicle is ‘paid for’ by a deduction from wages based on hours of use, mileage or a “clearly non-commercial” amount, is unlikely to establish self-employed status for the driver.

In a related development, four cycle couriers in London are currently seeking to be recognised as employees by the companies that they work for.

The four have taken their case to tribunal with the backing of the Independent Workers Union of Great Britain which has engaged Jason Galbraith-Marten QC to represent them, and say that because they are only allowed to work for one company and are monitored by it and required to carry its ID that they are, in fact, employees.

Employee status would entitle them to at least the minimum wage (they are currently paid between £2 and £3 per drop), sick pay, paid holidays and other benefits.

If the tribunal finds in their favour, it could have a dramatic impact on the up to 460,000 people estimated by Citizens Advice to be the subject of ‘bogus’ self-employment in the UK.


  1. Can further advice be given as i was previously self employed

  2. David Webber says:

    The contract I refused was the most aggressive I have ever read and having studied it just seemed to be a scam. My worry was and is who fills the gap when it falls apart and it will. We are individually responsible for our tax and insurance if your accountant gets it wrong you are responsible and I believe that when the umbrella companies collapse it is the driver/individual that will be liable. Not only back tax to pay but a potential whole in your pension. The sooner the umbrella companies are folded the better

  3. Del HAGGERTY says:

    AT LAST. BUT !!!
    The hmrc are the largest competitor to everyone at moment.
    I run the WTS just coach driver agency for coach drivers. And over the last10 years
    We Have jumped through hoops to operate how hmrc want it done.
    Then publicly you will see drivers stating the hmrc
    Have allowed them to be driver to be self employed.
    Personally I welcome a one rule for all by hmrc.
    But would insist that they start today with themselves,
    The rules must be consistent and adhered to.
    This also creates fair competition between company’s.
    I am more than happy to help to get a one rule for all.

  4. Robert Wilson says:

    Just tell HMRC that your a multi millionaire MP or run a multi national company and they will turn a blind eye and probably let you know the best place to put your money, but if you’re a working man trying to get make ends meet your screwed they’ll pursue you and nail you to the wall

  5. Bob says:

    I’s a pity the HMRC are not as diligent when chasing the obscenely wealthy tax avoiders stuffing their money in offshore bank accounts or big buisness.

    • Chris says:

      What do you think HMRC are doing. I’ve work worked for these Agencies, I’ve lost thousands of pounds in wages working for them. Most of you haven’t got a clue. If you work for an agency and your a good worker. the company might want to employ you. Not if your working for an Agency, The agency will ask for 13 weeks pay for the company to take them for there books. Would any company pay that?

  6. mark taylor says:

    I have 4 lorries we pull form the same company where dose that leave me

  7. MICHAEL says:

    Are there any plans to include coach operators in this? We are running alongside operators with self employed drivers who are undercutting us at every turn. We pay pensions, holidays and sick pay whilst all they do is hand over a pay packet every week.

    • Nav says:

      Hgv or PCV doesn’t matter.
      Still can’t believe the Umbrella companies are still going in any form of transport (1st seen them about 5yrs ago in NW London). The drivers don’t put up stamps. Holiday pay is inclusive (but hidden) per week. You actually pay them to rip yourself off. Cheap Labour from poorly unregulated countries fall victim to this format of modern day piracy. HMRC as previously mentioned might follow the drivers for underpayment of tax….Agency’s are avoiding the issue as it cheaper, and playing the ignorance card when pushed on the matter.

  8. Mick Symon says:

    Not before time. Bogus self employed undermine T&C’s of full time employed drivers and assist in the race to the bottom while avoiding expenses the rest have to pay.

  9. Andrew says:

    (Employee status would entitle them to at least the minimum wage (they are currently paid between £2 and £3 per drop), sick pay, paid holidays and other benefits.)

    Thats what they want! Everyone to get minimum wage! If you getting a bit more you’ll pay more. They don’t care if you working 60 hours a week to get money to pay bills.
    Sick pay and holiday pay from your pocket and 0 hours contract.

  10. Steve Peacock says:

    It’s a pity that you agency drivers don’t realise that it’s your agency taking the piss out of you, not the government, so your agency don’t pay your tax, so they can offer the service cheaper to the customer, but when it all goes south you end up with a huge tax bill. !

    • Jay willis says:

      This isn’t all true- I’ve worked for agency’s who pay direct and deduct my tax and NI with the option to include holiday pay within my hourly rate or have it saved in a separate pot which shows each week what you have. Also through some agency’s that use an umbrella company to pay- you pay a fee to be paid but you can claim expenses through them each week which is a tax relief miliage- meal allowance- laundry etc typically […] if you earn about 660 a week I would take home approx £570 a week with my expenses put through which was about £150 a week- never had a issue over the years

      • JustJames says:

        In April 2016, HMRC changed the tax laws so that agency employees including drivers would not be able to claim travel or subsistence expenses, just as if you were an employee of the end client. I think HMRC realised that this was a bit of a ‘fiddle’ and decided to crack down on it. ‘Umbrella’ companies can still offer what amounts to a ‘rolling contract’ so that individual contracts of employment aren’t needed for each new client/assignment, but each place of work will be treated for tax purposes as ‘permanent’ and therefore expenses for travel/commuting will not be allowed. Those who continue to operate as before, claiming expenses might be in for a nasty shock when HMRC finally catch up with them.

  11. Roger says:

    This is small fry in the scheme of things and keeps the economy going, HMRC will feel no guilt about going after small business as the only ones they must leave well alone are the big ones that will take them on and
    create waves high up. Its fine apparently to be anti business in the uk if its a small business who are the
    majority but cant fight back.

    • JustJames says:

      Very true. Nothing changes unless we make it change, and history has shown time and time again that the rich and powerful will not give up their privileged positions without a fight, and usually a ‘bloody one’.

  12. J M Sturdy says:

    how can you be self employed with no truck.

    • Ken Allan says:

      I’m self employed with no bus of my own. I invoice companies for my driving service. I put my own accounts in and pay my tax when due.

      • Ches says:

        I am self employed as well and no really understand the noise. I pay my tax and working on that way as it suite me and this is why I said no when they offerng contract

      • Ian Wilkes says:

        Hi I
        recently became semi-retired, so decided to go self employed labour only. Been doing this for nearly a year, various companies most recent one been audited hmrc say I cannot keep doing this. It suites me get hourly rate well above nbr, work hours I want if I want pay my taxes and ni so what there problem ?

  13. Dave white says:

    Don’t these so called self employed drivers know that the HMRC get their names and details from the agency they work from or the company they work for and hit them with tax and NI owed. If you don’t get a accountant to sort out what you owe the tax man will find you.

  14. Joe says:

    The driving industry. Hmrc and the RHA need to put regulations into place where you are unable to Just become a self employed driver and this needs to be a clear understanding to English and drivers from other countries as I am seeing more and more drivers take this risk and as a result, companies and agencies are making pocket fulls of money and no further explanation is being given to the Driver, furthermore drivers may think that they are taking good wages home only to find at the end of year being faced with a huge tax bill and the drivers from other countries dissappear until the next season and do it all over again next time, this situation is keeping wages for the genuine drivers and haulage businesses therefore killing businesses and giving the true driver who only wants to be rewarded in what he or she is doing on a daily basis and that’s serviceing all industries getting there goods in good time and safely.

  15. P Burkitt says:

    how do self-employed drivers stand if they are a limited company.

    • JustJames says:

      I suggest you check out the HMRC website to see if you are classed as truly self-employed or are in fact employed. You can also phone them, (but don’t give them your details0 and make a general enquiry.

  16. Gary rourke says:

    As i see things why should us drivers not claim self employment status to HMRC??
    At the end of the day we are not crossing any lines that these umbrella/agencies are crossing to which HMRC are turning there head away from this going on,
    Honestly do not think it right that these agencies make money out of us whilst treating us as tools to line there pockets while they sit on there butt’s

  17. C.C says:

    Hi , ..
    At the moment I’m self-employer driver and I work for an agency .. This agency push all the drivers to set up a Ltd or to sign with a umbrella company . The agency secretary said : because of this new legislation we have to employ you guys but we can not do this …they say that there is a new legislation and they are not able anymore to pay us front their agency account to our personal account. There have to be something in the middle like a Ltd or umbrella company in order to get paid . This is legal?normal? ..I now self employed have 0 rights in UK ,I just need an answer for my self .
    Thank you!

  18. Tony Hennigan says:

    So the question is why do HMRC/Companies house allow divers to register and set up as a LTD company?
    Also its acceptable to be self employed in the following:
    Brick Layer
    Painter and decorator
    Anything within the building trade
    Judges etc etc
    An LGV driver will have spent thousands of £’s to obtain their specialised driving licence and have regular associated costs to retain their licences ie: DCPC updates,the term Discrimination springs to mind,

  19. Phillip Beech says:

    If there is anyone avoiding tax look at the building trade, landscape gardeners, aerial installers etc getting cash in hand off customers and it goes straight into the wallet not declared. That’s who HMRC should be looking at but it’s to hard for them to catch them at it

  20. John says:

    Im self employed with no truck i invoice my cotractor every week pay my own accountant,have my own liability insurance.claim what little expenses i can.Hmrc have stopped us claiming meal allowance over £5. per day without reciepts yet an MP can claim £300 per day without reciepts .The goverment encouraged us to go limited company so they could show the unemployment figures dropping as well as the zero hour contracts,Now that they have achieved that they now want to move the goal posts.grrrrrrrrrrrrrrr.

  21. Tony Simons says:

    I have been a Ltd Co driver since 2004. I file my accounts every year with a reputable accountants help, then pay my tax and ni due.
    I don’t usually work for the same outfit all the time, I mix it up so I am not always doing the same thing.
    Can’t see a problem doing it legit, never trusted umbrellas when I first saw them mid-noughties. The deal sounded naff, so I refused it. Much to their amazement!!

  22. Willow says:

    Can not see what the problem is if you pay your tax and stamp use a reputable acountant provide public liability insurance jobs a gooden every one is happy

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