IR35 changes – engaging drivers through personal service companies

Posted 16/01/2020 : By: Tim Ridyard & Colin Makin

Do you engage drivers through their own personal service companies directly or through an agency?

Have you reviewed the basis upon which you engage these drivers?

Are you aware that some changes are due to come into effect in April 2020?

Are you comfortable that you will be IR35-compliant when the changes come into effect in April 2020?

With effect from 6 April 2020, the existing rules in the public sector will apply to medium and large businesses in the private sector. Crucially this will mean that where you engage a driver under an arrangement such as a private service company you may be deemed to be the employer of that driver and liable to deduct the relevant income tax and National Insurance.

In order to address this you need to:

  • be aware of the changes and whether they affect you
  • review your existing arrangements to identify which drivers you engage are affected
  • check their employment status
  • notify those affected as to your determination of their status
  • implement a system for such checks for future contracts
  • be prepared to make tax and NI adjustments.

We strongly advise you to review the status of all the drivers (and indeed other staff) you engage anyway. From an employment point of view are they employees, workers or self-employed? Their category dictates their employment rights - which they may wish to invoke in the event of a dispute or where you part company. The true status of a driver is what the reality of the arrangements are as a matter of law and fact!

Remember also that where your business holds an operator’s licence the Traffic Commissioner expects that you fulfil your HMRC obligations and you do not avoid tax and NI a) via private service company arrangements or b) by categorising drivers as self-employed when this is not the case. Your good repute as an operator – a fundamental requirement – can potentially come into question here.

If you would like further advice and assistance on the IR35 changes then please get in touch with us.

Our Transport Law specialists Tim Ridyard and Tim Norris are able to advise you on all aspects of road transport issues and compliance.

Colin Makin is a Partner is our Employment Law team and is able to advise you on a wide range of employment law, including the employment rights of your employees and HMRC issues.

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