To point out IR35 is a major factor in the lack of HGV drivers

[mikedyson]

As this well researched (for once) article in the i points out =

inews.co.uk/news/hgv-driver-shortage-tax-change-ir35-lorry-crisis-uk-europe-1239313?ito=email_share_article-top

Point out whatever you like, why do you think that would be unreasonable?

So, haulage companies and hgv drivers were trying to dodge tax and national insurance and now they can't.

Might it not make more sense for the haulage companies simply to pay employees properly?

It seems to have been overlooked as a cause and yet it's a major one - was totally avoidable and HMRC/the government were repeatedly warned.

Unlike my old business which can be offshored to anywhere in the world, we can't get people in India to drive our trucks from there (yet).

HMRC has exported a load of jobs by a daft and complex measure that was always very bad law.

@jgw1

So, haulage companies and hgv drivers were trying to dodge tax and national insurance and now they can't. Might it not make more sense for the haulage companies simply to pay employees properly?

Except it wasn't a dodge in many cases - that's just the silly HMRC propaganda that people have chosen to swallow.

But the rules are so complex HMRC have made companies run scared of employing any genuine freelancers.

If HMRC investigate you, even if you win (and historically a large majority of IR 35 cases have gone against HMRC), they have made it so costly and time-consuming that companies (and not just Hauliers) have refused to engage with legitimate freelancers.

HMRC has destroyed a system that was working fine and exported the jobs (and therefore all the tax) overseas and created a crisis here - and they were warned.

Well I mean yes, IR35 didn’t “help” keep foreign drivers, but look at his own graph. It shows that the first HUGE dip happened before IR35. He even has to label that IR35 isn’t the enormous nosedive - it’s that little second dip. In fact, the enormous nosedive, which IR35 didn’t take the industry half back down to, happened at the beginning of 2020… you know, same time as Brexit.

Except it wasn't a dodge in many cases - that's just the silly HMRC propaganda that people have chosen to swallow.

I must apologise, someone earlier in the thread posted a link to what was purportedly a well researched article on the issue which suggested that hgv drivers wanted to be self employed to pay less tax, and haulage companies went along with it, because it reduced their NI contributions. No idea why I suggested it was a tax dodge.

It's no different to the majority of white collar workers eg IT contractors.

@SudokuWillNotSaveYou

Well I mean yes, IR35 didn’t “help” keep foreign drivers, but look at his own graph. It shows that the first HUGE dip happened before IR35. He even has to label that IR35 isn’t the enormous nosedive - it’s that little second dip. In fact, the enormous nosedive, which IR35 didn’t take the industry half back down to, happened at the beginning of 2020… you know, same time as Brexit.

That's the rate of vacancies though - it shows the vacancies going UP after the IR35 rules came in.

IR35 is a pretty straightforward test to show if you should be treated as an employee. If you can’t use a substitute, get told what you need to do (as well as when, and how), and aren’t at much financial risk… you are probably inside. I do these assessments for IT contractors, a lot of people have avoided a lot if tax by taking the benefits of being a company, with none of the risk. If you are truly self-employed, you won’t be found to be inside …
How many companies would allow a haulier to send a substitute - that they have no right to interview, and no right to reject ?

IR35 is bollocks. I am self employed and one of my clients insist I fall under IR35 rules because they make me sign an annual contract. Last year I billed them 34 hours and this year I've billed them 19. There is a huge amount of paperwork and it pushes my accountancy fees up.

I won't be working for them next year which is a shame because they've been a client for 10 years. But it's just a pain in the arse now.

The rules are not just about being able to use a sub @ExtraOnions - that's a very simplistic interpretation

Yanbu

@Clymene

IR35 is bollocks. I am self employed and one of my clients insist I fall under IR35 rules because they make me sign an annual contract. Last year I billed them 34 hours and this year I've billed them 19. There is a huge amount of paperwork and it pushes my accountancy fees up.

I won't be working for them next year which is a shame because they've been a client for 10 years. But it's just a pain in the arse now.

The rules are not just about being able to use a sub @ExtraOnions - that's a very simplistic interpretation

I am aware it’s not just about substitutes … but that is one of the determiner questions in the assessment.

If IR35 isn't complex why does it take several years and thousands of pounds to get a final decision when HMRC challenges someone?

It's actually very, very complex.

@mikedyson

If IR35 isn't complex why does it take several years and thousands of pounds to get a final decision when HMRC challenges someone?

It's actually very, very complex.

For a vast majority of cases it’s simple, but like all rules it gets challenged and needs working through. These cases take time, and we learn every time there us a judgement.

People used the old legislation to avoid paying tax …. Wanting all the tax breaks of being self employed, with none of the risk …

@jb7445

Clymene, you are clearly not an employee based on what you're saying. It's not IR35 that's bollocks (although it has been a massive pain in the arse for many companies), it's just that your client doesn't understand it...

My client is enormously risk averse. And a lot of big companies are. I've no doubt that there are some companies that avoided treating people as employees as a way of getting round paying them benefits. The problem is that the legislation is so broad that it's made a lot of businesses very nervous.

HMRC has a "tool" (CEST) that is supposed to allow you to work out if IR35 applies. In about 20% of cases it can't decide - why would that happen if it's simple?

Also according to CEST, around 49% of the cases it's used for show the contract is outside IR35 - but the level of advertised outside IR35 contracts is running at about 26%.

It's a very complex area.

@VanGoghsDog So, reverse the words (sorry I bollocksed it). Either way, you have a graph where IR35 isn’t the determinate. The steep rise seems to have started around Brexit or even April of “Brexit year” (Brexit plus the 90 days some workers might have been allowed to stay?) and IR35 only came in when it was already halfway up.

Point: The graph shows a steep loss of drivers starts before IR35 and IR35 is just another pile of shite on the way.

@jb7445

Clymene, you are clearly not an employee based on what you're saying. It's not IR35 that's bollocks (although it has been a massive pain in the arse for many companies), it's just that your client doesn't understand it...

HMRC has deliberately created a regime that is complex and hard to understand, and has companies running scared because they cannot take to risk of an HMRC costing thousands and taking many years.

This has led to the destruction of a highly flexible sector, for no benefit.

@jb7445

As a lawyer working in this area for a major employer (yes, employer because they are employees!) of HGV drivers, as well as other contractors in IT etc. - yes it was a tax dodge and yes the big companies are currently doing everything they can do to get around it.

IR35 really isn't complex. If you're an employee in law then employment taxes need to be paid by both employees and employers.

But the employers don't pay employment taxes under IR35 - the contractor usually gets hit for both employers and employees NI.

The news dare ever point out that the issue is IR35. Even some posters on this thread clearly don’t understand its not a tax dodge .. I’m truly self employed as an IT consultant, I provide all my own licences and equipment yet some of my clients were to risk adverse to place me outside or they have a blanket assessment. I believe blank assessments are quite common for HGV drivers.

Despite apparently constantly striving towards the simplification of tax it just gets increasingly complex and difficult for the average man in the street to understand. I’ve worked in tax for 20 years. My legislation books are now double (at least) in size to what they were then.

Ignoring the moral rights and wrongs of what went on before. Anyone now caught foul of IR35 ( and let’s not forget it’s been around in one way or another for a long time) will effectively have had a cut in net pay. Anyone facing a pay cut is going to look round for alternative employment with either better money or conditions. It was stupid to do this at the same time as Brexit.