Everyday, we get asked by HGV Drivers, “Am I safe from IR35?”. Well the answer is, “It depends”……… Basically there is no right and wrong answer here, however our interpretation is that, so long as the HGV Driver is actively engaged in running a legitimate, independent, compliant limited company and actively assesses the risks involved in running that company, then he or she is likely to pass any threshold of trading test imposed by HMRC……… That said, one size does not fit all and every HGV Driver’s circumstances are likely to be different………..
So we are left with exploring factors of commonality, which all HGV Driver’s exhibit.
- Quality Standards – All HGV drivers must undertake a rigorous Class 1 or Class 2 driving examination, supervised by the DVSA. This test separates those who can legally drive a HGV lorry and those who can’t. This exclusivity in itself, costs in excess of £1,000 to achieve, with some drivers paying a lot more, if they are unlucky enough to fail. I have personal experience of two drivers who have recently taken their Class 1 test. Both drivers were Class 2 drivers and both wanted to become Class 1. Both drivers paid circa £1,000 for a few days of training and and then to take their tests. The results were mixed with one driver passing and the other driver failing. For one driver, the joy of becoming a Class 1 driver, and the other a bill for £1,000 and the same status. The point I am making here is that there is financial risk involved in every aspect of HGV Driving……..
- CPC – All HGV drivers must undertake 35 hours of Driver CPC (“Certificate of Professional Competence”) during a five year cycle. This qualification is not a “gimme” and there are instances where drivers who have not kept up their CPC requirements are effectively banned from driving their lorries. Quite a risk I would say……..It costs money to obtain a valid CPC card, again prima facie evidence of the driver managing the financial risk he or she faces.
- Holding Public Liability Insurance. This is a must for every driver who operates a “labour-only” limited company. It not only protects the Public from liability issues caused by the Driver, but it also demonstrates that the Driver recognises the risks involved in driving a lorry, but is actively mitigating those risks……
- Working with agencies: the driver is often outside of the Agency Worker’s Directive and is therefore NOT classed as an employee of agency. This is for me the key reason why operating a legitimate, independent, compliant limited company outside of the AWR rules is evidence of trading and undertaking financial risks. If a Drivers is outside of AWR, he or she is not entitled to sick pay from the Agency nor other Statutory payments. The HGV Driver must make his or her own sick pay insurance arrangements, again demonstrating the HGV Driver is aware of the financial risks involved.
- Getting paid from Agencies. Again, it a fact of life that some Agencies unscrupulously engage contractors and then look for every reason “under the sun” not to pay the Driver for his or her work. This is often managed by reference to the Employment Agencies Act 1973 (as amended by The Conduct of Employment Agencies and Employment Businesses Regulations 2003) which protects the driver from non-payments for work supported by timesheets. It is therefore the responsibility of the Driver that he or she accurately records the work performed in order to ensure getting paid, but this might incur legal costs if challenged by the Agency. Therefore, the Driver, though protected from statute must actively manage this risk………
- Getting paid from direct companies. Again, it is inevitable that some companies are unwilling to pay a contractor their payments for work done often if there is a problem with the standard of their work. As they are working outside of the protection afforded by the Employment Agencies Act, it is often down to at best to written terms and conditions and at worse a verbal agreement. Such a financial risk can only be managed by the Driver.
- As most HGV Driver’s who work for either agencies or direct with companies often have periods of no work, especially in the January and February months or between assignments, again this is evidence of a driver managing and experiencing the financial risks of operating a limited company.
There is are also a raft of other guidance on the HMRC website
“Running a business
You’re probably self-employed if you:
- run your business for yourself and take responsibility for its success or failure
- have several customers at the same time
- can decide how, where and when you do your work
- can hire other people at your own expense to help you or to do the work for you
- provide the main items of equipment to do your work
- are responsible for finishing any unsatisfactory work in your own time
- charge an agreed fixed price for your work
- sell goods or services to make a profit (including through websites or apps)
Many of these also apply if you own a limited company but you’re not classed as self-employed by HMRC. Instead you’re both an owner and employee of your company.”
Therefore, it is arguable on many pretexts that a HGV driver, who sells his labour, will be able to demonstrate that he or she is actively engaged in running a legitimate, independent, compliant limited company and actively assesses the risks involved in running that company.