I have been approached by a potential client who has his own white van and has been offered a new "job".
He says the courier company he will be working for have told him he will be self-employed and will be paid £175 a day. He has no say in what he will charge, even though he will be treated as self-employed, and no say over what actual work he will be doing. Its an all-or-nothing take it or leave it scenario.
He will also be given a fuel card to use.
I'm not convinced its a self-employed arrangement, sounds more like employment to me. They even want him to complete timsheets.
Any thoughts?
Replies (33)
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My thoughts
It could be employment, it could be self-employment, but if the 'employer' gets it wrong it's their head in the noose.
Does it matter?
It is the employing party that is responsible for getting the relationship right.
unfortubately this seems to be
This is how all courier companies work now days yodel, FedEx etc. Your self employed so they don't have employers NIC etc but really applying all tests your employed.
only thing that I'd question is the daily rate from what I've seen it's usually done on a amount per delivery around 50p per parcel so you need to deliver 13 parcels per hour to get min wage. The £175 per day is probably more of a max per day rather than a guaranteed amount per day
i have a number of clients
who work as couriers. they are forced to open their own ltd company and are given a set amount per parcel delivered. usually they also 'help' the shareholder/director to lease their own van. I would say that are providing a service and hence 'self employed'
Not conclusive but ....
.... if he has his own white van, I'd say he was self employed anyway.
Need to see his contract, really.
Hello
This is how all courier firms seem to operate. I find it odd that, so far, HMRC have not challenged this. As others have said it's not a problem for your client, but could become a huge problem for the courier industry at some point in the future.
HMRC`s view is considerably different on this matter depending if the driver owns / leases the vehicle. Keep in mind that it is just HMRC`s view and not something statutory. They can`t know this until they do an IR35 enquiry.
Ethics - somewhere north of Sussex?
How can it be ethical to complete the self employment pages of a client's Tax Return when you have formed the view that he should properly be regarded as employed?
Thuthex
How can it be ethical to complete the self employment pages of a client's Tax Return when you have formed the view that he should properly be regarded as employed?
How much better could that Ethics joke have been ?
Ethical or not, it doesn't alter the fact they were self-employed for the period.
How would you propose declaring the income?
Besides
If he isn't self employed, then he isn't self employed - regardless of whether he has been treated as such..
If he's engaged by the company as a self-employed courier, then he is self-employed until proven otherwise.
Really?
Self employment is a question of fact and law. If the "employer" has chosen the wrong category, then it is wrong from the start, not from when it is picked up.
Whether or no the worker is exposed to the consequences of recategorisation depends on the circumstances. Usually, they will not - but IMO there is still an ethical issue in the preparation of the Tax Return if you are party to a client making a declaration that you are of the opinion is wrong.
Employment is not a question of fact
It is often a question of several facts, some of which very often point in opposite directions.
If an individual comes to me with an employment contract in one hand and a P60 in the other, and asks me to complete his SATR as if he were self-employed he would be put straight or put out of the door. If on the other hand, both the 'employer' and 'employee' have decided that the relationship is one of self-employment then I'd be happy to complete the SATR on that basis with no qualms whatsoever. I may advise him of the potential consequences of a successful HMRC status challenge, but no ethical problem for me at all.
Had a bad experience have we?
https://www.accountingweb.co.uk/anyanswers/question/appealing-status-dec...
Post City Link Administration
A number of the drivers for City Link were, it is reported ,self employed with their own vans and if the news is correct are now facing bad debts for invoices not paid pre administration.
I would be interested to see any of them taking the counter argument through the courts and arguing that they were employees. If they could argue the case and win would not their "wages" become preferred creditors rather than unsecured ordinary creditors? (If my very poor understanding of insolvency matters is correct.)
However I honestly suspect they would receive short shrift by the courts who I think would be unlikely to overturn the written contractual relationship between the parties in such a scenario, accordingly this thought gives hope that any challenge by HMRC re status would also not succeed.
If it is is such a certainty they were really employees why are they not collectively raising a legal case to argue this point?
City Link
It could be that City Link drivers were genuinely self employed, you would have to check their 'badges of trade'.
In the OP's case the courier company appears to be acting as an employer by dictating all the engagement terms.
Technicality vs Reality
Technically it's not possible to form an opinion on the contract without seeing it, and then making sure that it is being followed in reality.
But we all know what is going on here. The reality of the relationship is master-servant (employee) but the contract will be drawn up, probably with legal advice, so that it hits the right buttons and is a contract for services. End of argument.
The reality is also that the courier industry is fiercely competitive. That of course is the 'fault' of everyone who uses the internet and goes for the 'free P&P' option. CityLink fell by the wayside, and others will follow. Survival involves cutting cost to the bone, and that means putting the squeeze on the workforce. Regulations such as NMW and WTR get in the way of this goal, of course. One way round it is to make the workforce self-employed, and impose rates such as 50p per delivery that outofpractice quotes. It is no wonder that white van man has a reputation for agressive driving; he is in a hurry to try to earn a living wage. As a result our roads become more dangerous places...
Any political party that pledged a realistic way of putting this nonsense right would earn my vote. But I don't suppose it's going to happen.
Flat rate
Thanks for all the responses.
He has now told me he is being "encouraged" to take their fuel card because they make a profit from the VAT?? My potential client is not VAT registered as he doesn't need to be.
He might not need to be but he could make maybe a few quid from the VATmen on the flat rate scheme.
Have a look at the numbers
This
Thanks for all the responses.
He has now told me he is being "encouraged" to take their fuel card because they make a profit from the VAT?? My potential client is not VAT registered as he doesn't need to be.
He might not need to be but he could make maybe a few quid from the VATmen on the flat rate scheme.
Have a look at the numbers
This raises the question whether the white van man would be under 10% or 12% in FRS?
EDIT: It is 10% (9% in the first year of registration). I thought that that he didn`t own the van and 12% would probably have been less likely to be challenged.
VAT
I assume that by using the company's fuel card the company are billed for the petrol directly and can then reclaim the input VAT, whereas if the courier pays for it and charges for it on an invoice they can't - because he is not VAT registered, so no VAT on his invoice
Agree
The company can pay for the workers fuel and reclaim the vat, but the so called discount is actually a recharge and a vatable supply.Apparently the fuel card thing works like this..
Van man uses the fuel card and the company get billed for the fuel and reclaim the VAT.
The company then expects the van man to offer a discount against his charge equivalent to the VAT inclusive amount of the fuel.
So company claims input VAT on the fuel but its "sale" is zero-rated as van man is not registered for VAT and so can't charge it.
Sounds iffy to me.
Agree - my thoughts exactly. Ask the question in my last post - that's the key to the problem.
Still - it's not Vanman's problem. Might be the OP's if he thinks a Suspicious Activity report is appropriate.
Depends
Not zero rated. Outside the scope.
I'm not convinced that the company has used the fuel in its own trade.
It's the classic question "When did who supply what to whom?"