Conundrum
Options
maxmycardagain
Posts: 5,747 Forumite
in Cutting tax
Sorry if this the wrong place to post but...
You may not know much about taxi driving and how a "base" operates but bare with me..
Option 1 is rent a car and "just add fuel" (all expenses covered by the base) for circa £300/week.
Option 2 is own your own car and rent a radio off a base (£150/week)
Both options avoid PAYE tax/stamp
So - car £300/week or radio £150/week
there are 2 issues here
Renting a car seems to only pay lip service to the HMRC rules on self employment - mainly - have you invested in equipment?
both option (in 75% of cases) see no receipt for payments to bases given to drivers who dont seem to realise that THEY could be liable for tax on the rents going back 6 years (20 if HMRC sense a deliberate fraud)
Who is at most risk here, the base or the car renters?
You may not know much about taxi driving and how a "base" operates but bare with me..
Option 1 is rent a car and "just add fuel" (all expenses covered by the base) for circa £300/week.
Option 2 is own your own car and rent a radio off a base (£150/week)
Both options avoid PAYE tax/stamp
So - car £300/week or radio £150/week
there are 2 issues here
Renting a car seems to only pay lip service to the HMRC rules on self employment - mainly - have you invested in equipment?
both option (in 75% of cases) see no receipt for payments to bases given to drivers who dont seem to realise that THEY could be liable for tax on the rents going back 6 years (20 if HMRC sense a deliberate fraud)
Who is at most risk here, the base or the car renters?
Now we all know how it felt to play in the band on the Titanic...
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Comments
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so read up on the Uber case
https://www.theguardian.com/technology/2016/oct/28/uber-uk-tribunal-self-employed-status
note particularly: "Drivers do not and cannot negotiate with passengers. They are offered and accept trips strictly on Uber's terms"
there is more to being self employed than who you pay for equipment...
https://allaboutaccountants.com/tax-advice-for-uber-drivers/0 -
so read up on the Uber case
https://www.theguardian.com/technology/2016/oct/28/uber-uk-tribunal-self-employed-status
note particularly: "Drivers do not and cannot negotiate with passengers. They are offered and accept trips strictly on Uber's terms"
there is more to being self employed than who you pay for equipment...
https://allaboutaccountants.com/tax-advice-for-uber-drivers/
Thanks, those cases relate to uber but uber is unique, i refer to every "proper" local taxi firm around the country, where it has caught the attention of HMRC all non-car owning drivers became PAYE overnight.
The amount of tax being avoided is enough for a new aircraft carrier or hospital...Now we all know how it felt to play in the band on the Titanic...0 -
maxmycardagain wrote: »...Renting a car seems to only pay lip service to the HMRC rules on self employment - mainly - have you invested in equipment?...
Where did you get that idea from?
The self employed frequently do need to invest in equipment. But as far as I'm aware, if they do, HMRC don't really care how they finance that investment. Have you never heard of hire purchase or leasing?
Oh, and I don't think there is any requirement to invest in equipment.
Of course I could be wrong. Perhaps you have a link to the relevant section of the Employment Status Manual where this rule is laid out?0 -
then i suggest you read around a bit more since you seem to be making a sweeping comment without backing it up with anything substantive.maxmycardagain wrote: »Thanks, those cases relate to uber but uber is unique, i refer to every "proper" local taxi firm around the country, where it has caught the attention of HMRC all non-car owning drivers became PAYE overnight.
The amount of tax being avoided is enough for a new aircraft carrier or hospital...
"Self" employment is based on a lot more than you appear to think it is, and is open to challenge on points other than you make. As I said, how you pay for equipment, and who you "buy" it from, is not a major consideration. What really matters is your contractual relationship. I agree that the position of taxi drivers is open to question, all you have to do is look at the arrangements of say Addison lee to wonder why they regard all drivers as "self" employed, but, as I have no idea what their actual contractual conditions are then it is impossible to make a statement regarding them one way or the other, for example, although it is a rented car branded as Addison Lee, can you use it for your own fares? In contract speak: what is the extent of "control and direction".
https://www.gov.uk/government/collections/employed-or-self-employed
"Where two individuals are engaged to carry out similar work, it is possible for one to be self- employed and the other to be an employee because they have been taken on under contracts with different terms and conditions."
https://www.gov.uk/hmrc-internal-manuals/employment-status-manual/esm0003
how to determine the status of a "worker":
https://www.gov.uk/hmrc-internal-manuals/employment-status-manual/esm05000 -
Now we all know how it felt to play in the band on the Titanic...0
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HMRC are well aware of what goes on, and it's been going on for the whole 35 years I've been an accountant, so if they were unhappy about the way taxi drivers are set up, they've had plenty of time to change the law.
It's not just taxis though who "rent" their vehicle in that way. Courier and haulage drivers do it too, even the big names you can't help but see on motorways, so you end up with a HGV driver "renting" their rig from a national firm, fully signwritten etc to operate on a self employed basis.
In fact, I've heard that Sky installation engineers and British Gas workers operate in the same way, i.e. self employed but "rent" a signwritten van. Someone told me once (can't verify) that some roadside assistance vans are the same (perhaps AA/RAC etc).
These big name companies will have expensive lawyers/tax counsel giving them advice and contract/legal drafting, so they must know it's all above board.
So, as you see, it's very well spread over several industries, has been happening for decades, etc., so I wouldn't lose sleep over it! If and when HMRC decide to do something about it, they'll need to change the law and then everyone will be able to work under the new legislation.0
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