Nice article on the front page of Truckstop News this month, headed
" Industry Issues Driver Tax Fraud Warning"
I won’t post the article, but it does make interesting reading, for those that haven’t seen it yet, you can read it on transportcafe.co.uk or get a copy from a cafe
The problem is a result of a rising number of truck drivers being paid as if they were self-employed, rather than through PAYE, the Association said. That is likely to be correct if the driver owns the truck – but if the truck belongs to someone else, the correct status is PAYE, regardless of where the payment is coming from.
This article is about self-employed drivers and has nothing to do with umbrella schemes which are PAYE and not self-employed.
What umbrella companies are doing these days are completely different to how they operated in early 2000 where you were set up as a LTD company, which as we know is not always possible being a truck driver.
The way they work now is, they offset your travel/meal expenses via P87 off your wages on a weekly basis, which you can legally do working direct for the agency on PAYE, only difference will be the umbrella fees to do this for you.
This is possibly RHA working on behalf of haulage companies who have lost and struggle to keep drivers because of low pay and crap conditions.
At the end of the day you are not defrauding the tax man for claiming these expenses if you are doing temporary work at the the same site for less than 3 months either via umbrella or self claiming.
Courtesy of Think Accounting the bills have started landing on the doormats of lots of guys where I work, ranging from 5k to 25k. Mine was £15600 although it may as well be 1.5 million 'cos they ain’t getting it. I folded my Ltd Co two weeks before the bill was sent and went PAYE direct for the haulier, I also live in a rented house furnished entirely by my girlfriend. If Think can evade payment by folding and renaming I reckon I should be ok too. Plus 28 days in prison would do wonders for helping me catch up with my sleep!
Ltd doesn’t protect you if you were running the business fraudulently despite what people seem to think and if you were an employee of your own Ltd company and the HMRC decide the expenses you were claiming weren’t legit then as you’re responsible for your own tax even though you’re an employee, they’ll still come after you and may decide to do via your tax code. Ultimate end game is they choose to bankrupt you and if you think that has little effect then wait until you want a new mobile phone or the girlfriend does or you want to change energy suppliers or the girlfriend does.
Those who have been partaking of the flat VAT rate scheme should be a bit worried. Hope they’ve been saving the money and not spending it.
I think you’ll find find the idea of umbrella schemes is to avoid the agency paying your tax and no therefore reducing there costs
the maoster:
I reckon I should be ok too.
As long as you don’t mind being declared bankrupt by HMRC
I’ve been saying that it was all going to come on top with the self employed driver’s for some time. I think it’s a good thing too. If a firm can’t afford to pay a driver through PAYE then they have no place in the industry.
peirre:
the maoster:
I reckon I should be ok too.As long as you don’t mind being declared bankrupt by HMRC
Absolutely no problem with that whatsoever mate.
peirre:
the maoster:
I reckon I should be ok too.As long as you don’t mind being declared bankrupt by HMRC
Typically, to be declared bankrupt by HMRC one would have had to have made absolutely loads of income “gross” and not paid any taxes on it. Come the demand from HMRC for back taxes owed, you suddenly find you can’t afford to pay say, 20% of the last five years’ taxable gross income of £120k per year… Eg. a tax demand for £120k… Who would have salted away THAT much ?
The back tax demand can’t exceed what you would have paid had you been PAYE in the first place in other words. Who goes bankrupt over amounts under £10,000?
With one’s house and pension on the line in bankruptcy these days - I personally wouldn’t bother with it at all for amounts less than six figures - which re-enforces my first argument.
the maoster:
peirre:
the maoster:
I reckon I should be ok too.As long as you don’t mind being declared bankrupt by HMRC
Absolutely no problem with that whatsoever mate.
Then you’ve obviously never been bankrupt. Not only does it massively ■■■■ things up for you but if you’ve linked finances with someone it ■■■■■ it up massively for them too. Your girlfriend may find that one day there’s an engineer from the utility companies knocking at the door who has come to fit poverty meters for gas and electric…If you’ve anything of value, ie a car, they’ll take that off you. Once you earn above a certain amount they’ll take every single penny you earn above that off you. And if the official receiver thinks you’re misleading them they’ll continue to refuse to discharge you year after year after year.
I have been bankrupt and whatever you’ve heard along the lines of “piece of ■■■■, you lose nowt, it doesn’t affect you and in 6 months or a year you get automatically discharged and that’s all” is ■■■■■■■■. The only people who come out unscathed are the unemployed who have nowt and earn nowt and can’t get credit or don’t own a car. As a lorry driver you’d have to go part time in order to have an income low enough that they wouldn’t take everything above a certain amount - was anything above £15k in my case as I had two kids.
Winseer:
Typically, to be declared bankrupt by HMRC one would have had to have made absolutely loads of income “gross” and not paid any taxes on it.
Nope. They can bank you for owing as little as £750 although they tend not to because they can just change your tax code and get it through that.
The back tax demand can’t exceed what you would have paid had you been PAYE in the first place in other words.
But they can add fines and late payment charges plus interest on.
I’ve re-read this a few times. It’s a very limited information wise. What I think it is trying to highlight is the drivers (and agencies) who get paid as being self employed. That is as a sole trader. Not many agencies do this now but there are a few dodgy operators who think they can still get away with this. What they are saying is to be a self employed truck driver you need to own a truck, which to me would seem open to legal challenge, do hmrc insist a self employed gardener can prove he owns a spade…
The bit they have got correct is non uk nationals using this (and setting up a uk ltd co) as a way to avoid tax for a short period. It is 18 months until you get the first letter chasing you and that is only from companies house. I have come across a lot of ee agency drivers using this who intend to go home once rumbled. Agencies turn a blind eye because they have a copy of there cert of incorporation to prove they checked them out.
The fact is once you are set up as a limited company you are not self employed (regardless of the scaremongering on here - should we time how long it takes for conor to respond!!). You are employed by a company which you also just happen to own. Yes its all a bit dodgy, but the use of this set up is rife in the economy and is not just in our industry. Doctors, social workers, probation officers, nurses are all using the same set up to be paid by the NHS. All the private contractors that the government use will be consultants!! using the same ltd company model that is used by us humble drivers. So we are not alone in that if the hmrc is coming after us, it will have to come after us all. Do they have the resources to do this, possibly not. The simpler solution would be to change the rules and shut the “loophole”, at which point there will be plenty of notice to make sure we abide by the new rules. They have been trying to close it since 1999 and still don’t have a plan
For me there are bigger questions surrounding the flat rate vat scheme that most of us limited drivers take advantage of. I have not been sure about this since I registered and have decided to de-register from the end of the next quarter. Lets face it we are not transport companies so we are claiming the wrong % at 10. It is much lower for contractor type classifications and makes it not worth the paperwork.
By definition the ltd company driver is a personal services company. As long as you do nothing fraudulent and pay you tax as required by law after deducting the expenses the law allows and keep accurate records to prove it there is little they can do. Apart from changing the law. No matter how much it seems to infuriate the people who you pay significantly less tax than !!. It wont take him long … I can almost hear him typing now…
Despite the vat registration, I never took the plunge and went down the flat rate route, instead I stayed on the standard scheme
Thing is, unless you can provide receipts for EVERYTHING you are claiming for, then HMRC has enough justification to bust you for fraud. I had one of these umbrella schemes trying to tell me I could claim up to £150 week for food as I was working nights at the time. I did point out I’d be dead if I tried to even spend half that on food in a week.
Now I’m a flask and sandwich guy, that doesn’t eat out at work, so apart from travel to work expenses which everyone that works has, I’d take some convincing as to the legality of any of these schemes. Some agencies are specifying umbrella or Ltd company only now and hopefully they’ll have few takers.
I agree with the sentiments of if I don’t own the truck and I don’t have a supply contract with the client, then by any reasonable measure, I am not self employed.
LIBERTY_GUY:
Thing is, unless you can provide receipts for EVERYTHING you are claiming for, then HMRC has enough justification to bust you for fraud. I had one of these umbrella schemes trying to tell me I could claim up to £150 week for food as I was working nights at the time. I did point out I’d be dead if I tried to even spend half that on food in a week.Now I’m a flask and sandwich guy, that doesn’t eat out at work, so apart from travel to work expenses which everyone that works has, I’d take some convincing as to the legality of any of these schemes. Some agencies are specifying umbrella or Ltd company only now and hopefully they’ll have few takers.
I agree with the sentiments of if I don’t own the truck and I don’t have a supply contract with the client, then by any reasonable measure, I am not self employed.
£150/week is incorrect. £140 is max but you wouldn’t do that as a trucker as you can only work 6 shifts so it’ll be £120 and all of those shifts would need to be 10hrs+.
£5 per day meal allowance under 10hrs.
£10 per day meal allowance over 10hrs.
No receipts needed. And don’t forget it’s only tax relief on those amounts, you don’t actually “get” those amounts.
I went bankrupt in 2008 and it was a walk in the park. Had an 8 year old car which I kept. I didn’t own that much that was in danger of being taken. They asked for a certain percentage over something like £325 a week out of my wages but apart from one week I never earned above that. I had to change banks from Natwest to Co-op which was no buggy. I was discharged after 9 months.
Only thing that went against me was I have life insurance of £150,000 and they put a charge of £45,000 on it should it ever pay out.
One good thing was when I phoned all the companies I owed. I spoke to a load of arsy nobs who tried to get tough with me. All I told them was ‘I am bankrupt here is my ref number please direct all calls to an office in Blackpool and if you so much as call me once I will sue you for harassment’.
HMRC are very quick to bankrupt, make no mistake, they would rather put you out of business so you have to take a job on PAYE
I agree with the sentiment that this is a big step and not to be taken lightly on the other hand it may be your only way out from under a pile of debt that you could never manage to repay in your working life.
It is also a fact that once you have been made bankrupt all creditors are referred to the Receiver, they cannot hassle you for payment and you are not allowed to pay them anyway even if you could
Just a health warning for people on the £10/£5 meal allowance. To claim this you need an agreed dispensation with your hmrc office. You get this by using the correct form to apply and get written confirmation.
The confusion comes as most employers have this and use it as a perk to reduce their employees taxable wage (some umbrellas have this too but lets not go there). This leads to drivers with their own limited company claiming the same amount. YOU CAN’T without applying for the dispensation.
Now here’s the killer when you apply for the dispensation it will get rejected (I know this through the experience and many emails) the reason is you are supposed to keep records that show the dispensation is monitored by random receipt collection. Hmrc argue that this cannot be done independently in a company with one employee where the employee is sole director. You can argue but won’t win … at least I didn’t.
The most you can claim is £2 per day.
I know drivers who claim this because their accountant says they can. Hence i don’t use an accountant and do things for myself. At the end of the day it will be me going bankrupt. If I want to claim something I go on hmrc website and download the notes relating to the rules. If i dont understand it I email them and ask for assistance. Saves me a few hundred quid a year and gives me piece of mind. I might pay a bit more tax than some but im loads better off than paye and can hopefully defend myself when/if the inspection comes without relying on others.
It always amuses me, when the soapbox is dragged out for it’s regular assault on the working lives of the Ltd Company drivers on here, how no proof is offered, no links to a hmrc pamphlet, no findings from a court, no link whatsoever, no matter how tenuous. But yet the words of the all-knowing must be taken as read without question.
Until I am in possession of authentic information from a reliable source I’ll carry on as I am, thank you very much.
Stanley Knife:
It always amuses me, when the soapbox is dragged out for it’s regular assault on the working lives of the Ltd Company drivers on here, how no proof is offered, no links to a hmrc pamphlet, no findings from a court, no link whatsoever, no matter how tenuous. But yet the words of the all-knowing must be taken as read without question.
I have in the past posted several long answers complete with direct links to the HMRC rules and guidance. I can’t be arsed to go through it all again but suffice to say despite your claim that no proof is offered, it has been and numerous times.
You carry on as you are, I don’t care. I equally don’t give a stuff nor do I want to hear about your woes if HMRC decide to send you a nice tax bill you can’t afford or if your “employer” decides to shaft you over.