Following the promise made by UK Chancellor Kwasi Kwarteng during the recent ‘mini-budget’ statement to repeal IR35 rule changes by April 2023, a leading commercial driving expert – Kieran Smith – has warned that the move could risk the ire of both HMRC and the government’s Transport Commissioner. 

Mr Smith, the chief executive of the Driver Require driver agency, has raised a red flag about the change that will once again permit self-employed drivers operating as limited companies of personal services companies (PSCs) to manage their NIC and tax affairs, whether genuinely self-employed or simply transferring responsibility from the end client or haulier. 

Changes May Be Delayed By the Parliamentary Process 

The warning focuses on the fact that hauliers should refrain from rushing back to using self-employed drivers, as the matter still needs to be debated by both Parliamentary Houses, meaning that delays to their introduction are likely. Speaking on the matter, Mr Smith had this to say:

“This opens it up to substantial risk of challenge, rejection and/or demand for replacement measures and legislation. What’s more, all companies were legally obliged to produce Status Determination Statements (SDS) for each of their worker categories, and they will have made committed statements that their workers fall within or outside the scope of the IR35 regulations.

Unless the working practices and contractual arrangements with these workers are changed substantially, it will be difficult to argue that it is legally reasonable to change their employment status just because the liability has been transferred.”

2019 Transport Commissioner Guidance Needs to Be Considered 

Kieran Smith also went on to say that hauliers still need to heed guidance offered by Senior Transport Commissioner Richard Turfitt in 2019 that it’s rare for any HGV driver to be genuinely self-employed (a contractor with limited company status) unless they themselves an owner-driver.

This guidance was used as part of the Bridgestep (UT/2019/54) public enquiry in 2019, which set a precedent for all future cases. During proceedings, it was established that the use of self-employed drivers in order to cut costs did not spare Bridgestep from liability after a railway bridge had been damaged by a lorry.

He continued: “The long and short of it is that, if an operator suffers an incident that brings them in front of the Traffic Commissioner, the employment status of their drivers will be an important consideration of the judgement process.

If the operator has engaged drivers on a PSC basis, whether permanent or agency, for the purposes of reducing staffing costs, this will lead to a loss of repute and contravention of the Senior Traffic Commissioner’s employment guidance, which will likely result in a harsher judgement and increase the risk of revocation of their O licence and/or disqualification of the transport manager.”

Hence, even if the IR35 reforms are repealed, and the financial liability for payment of correct taxes passes from the haulier back to the PSC driver, it is still not advisable for an operator to engage PSC drivers due to the risk of harsher judgements from a hearing with the Traffic Commissioner, nor are they likely to welcome being pursued by HMRC under the Criminal Finances Act.”

HGVC – Always Supporting the UK Haulage Industry

The warning provided is something that should be heeded by hauliers up and down the country. Whilst the need to operate cost-effectively is of high importance in the current, challenging climate, the measures taken need to be taken for the right reasons and not simply to avoid liability for their vehicles, drivers and their actions. 

At HGVC, we continue to offer industry-leading HGV driver training programs that can be scaled to meet any size of requirement. If you would like to know more about our nationwide network of training centres, take a look around our website. Alternatively, to get in touch to discuss your needs, either click on ‘contact us’ or call our team on 0330 818 8888.