Operators could face financial penalties if they are discovered to be paying employed drivers incorrectly to evade tax,
after the RHA highlighted the practice.
Nickie Elenor, employment consultant at law firm Rothera Sharp, told MotorTransport.co.uk that misleading the authorities about the employment status of a driver is an area that is “very much on HMRC’s radar”.
Her warning came after the RHA claimed that drivers are increasingly being paid as subcontractors, despite being employed by the company they drive for. This allows the operator and driver to avoid income tax and drivers’ rights under employment law and is seen by the association as unfair to those who abide by the rules.
The RHA warned that drivers should only be treated as self-employed if they own the vehicle they are driving, a model that many businesses in the home delivery sector have adopted.
If found to be paying drivers incorrectly, the haulier could be liable for any unpaid tax, National Insurance contributions and interest, as well as other financial penalties. Drivers may also make claims for unfair dismissal, backdated holiday pay, or other employment rights they should have received as an employee.
Elenor said: “Employers wishing to engage individuals on a self-employment basis, either because they believe this to be the correct status of the relationship or they wish to avoid their employment responsibilities and tax liabilities, should think carefully and consider the risks.”
RHA chief executive Richard Burnett said the association has raised the issue with HMRC. “The growing illegality is of real concern to our members, who all want fair competition. This should be of concern to ministers and we look forward to effective enforcement action,” said Burnett.
An HMRC spokesman said: “Employment status is never a matter of personal choice and is always dictated by the specific facts. When the employment relationship does not accurately reflect the underlying reality, the wrong tax is paid and we intervene to ensure the rules are applied as intended by Parliament.”