Operator Services

_Are your drivers employed or self-employed?

If you run a self-employed driver or owner-driver business (as is the norm in our trade) it seems an easy question, but the answer is not quite so obvious.

The government have certain employment indicators that supersede any driver/operator contract. For instance, according to HM Revenue and Customs (HMRC), an individual is likely to be employed if a majority of the following statements apply to them:

You can tell them how, where and when to do their work.
They have to do their work themselves and can’t outsource it.
You provide the worker with their “tools of the trade” (like vehicles and fuel).
They’re contracted to work a set number of hours.
They get a regular wage or salary, even if there is no work available.
They have benefits, such as paid leave or a pension as part of their contract.
You pay them overtime pay or bonus payments.

Many companies try to get round this problem with “Self Employment” driver contracts, or by having ‘independent’ vehicle suppliers, but in reality some licensed London private hire firms are only a ‘phone call away from a HMRC PAYE (pay-as-you-earn) inspection and a lot of trouble.

For years, the HMRC has turned a blind eye towards the employed/self-employed status of Hire and Reward drivers. The Private Hire and chauffeur trade could have been (and perhaps should have been) better-behaved; thankfully, the UK construction industry has always been a bigger and more lucrative fish to fry, but the Olympics are nearly here and the PAYE inspectors may have a tad more time on their hands – they could soon be knocking on your door.

So what can an operator/proprietor do to protect themselves? One of the ways is by using a payment company to ensure that self-employed drivers can maintain their self-employed status. Payment companies act as a middle man that pays drivers for the work you provide and acts as a supplier of labour
to you.

Drivers also benefit: less red tape and less paperwork; lower fees for accountancy; and no VAT payments (providing they are not VAT registered).
The opportunity to claim legitimate expenses at the end of the year through their tax return is also there. The benefits for the proprietor/operator are,
of course, saving money on direct employment costs (including Employers National Insurance) and on running a payroll department!

Payment companies are the answer to the sizeable problems developing within the private hire trade, which is next in line to come under HM Revenue and Customs’ microscope. The good news is that, with a bit of effort and planning, you can keep using self-employed drivers.