The RHA says employment tax fraud is becoming a serious concern for the transport industry, with more and more drivers being paid as if they were self-employed, rather than through PAYE.
Whether deliberate or inadvertent, this route of “dodging the correct tax code”, says RHA, means the employer evades income tax and National Insurance, as well as avoiding a raft of drivers’ rights under employment law.
“Law-abiding hauliers are losing drivers and work to firms and drivers who break the law,” says Richard Burnett (pictured), RHA chief executive.
“The practice is also damaging to law-abiding driver agencies, which are losing drivers to less reputable competitors. Incorrect tax status is not a new issue but it has become a much more serious concern this year.”
The RHA suspects that there are several reasons for the increase in fraud. Some firms want to cut corners, while others are being poorly advised, it says.
The problem is most prevalent among Eastern European drivers, says the RHA, although it is not limited to them.
“Hauliers who may inadvertently be paying drivers off-payroll may face a heavy claim for back tax and penalties of up to 70% of the tax and NI arising,” warns Burnett. “Also, individual drivers could face bankruptcy if they evade tax payments and then HMRC enforces its rules.”