Forget flagging out trucks don't pay income tax!
Page 4
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• by Mks Brigpall
Most international hauliers are failing to take advantage of a tax loophole that allows their drivers exemption from paying income tax. Thousands of drivers could not only avoid future tax—they could claim rebates worth thousands of pounds. According to Isle of Wight tax consultant Howard Derham, very few hauliers are aware that staff who are in the country for fewer than 91 days a year are exempt from paying income tax on their earnings. Although most people taking advantage of this scheme are rock stars or the very rich, Derham says there is nothing to stop truck drivers from following suit.
He has just won rebates amounting to several thousands of pounds for three international drivers and says there is nothing to stop others following suit. The sort of drivers to which this will apply ship out to the Continent on a Sunday
• News that drivers who are out of the country for at least 275 days in a year do not have to pay UK income tax will further complicate the issue of flagging out. The Government has always argued that the UK's lower social costs have meant it is not worth registering trucks abroad. This tax loophole will only add to confusion over whether flagging out is really worth it. (See also page 3.)
night and return on the following Friday," he explains. They spend most of the week out of the UK and are only at home during their four weeks' holiday"
The qualifying drivers, or owner-drivers, have to be in the UK fewer than 91 days a year, but this does not include days of arrival or departure, or any days of illness. And for drivers who are on the ferry in the same day they leave the depot that day does not count as being in the UK. The deal applies to drivers leaving on any ferry—they just have to be off UK soil.
Derham, who is a former tax inspector, says hauliers taking advantage of this tax position have been able to pay their qualifying drivers less as they, in turn, are no longer paying several thousand pounds a year to the tax man. But the position on National Insurance is unclear, he warns, so it's advisable to keep paying it.
A spokesman for the Inland Revenue confirms that drivers could qualify for the exemption and that many will be eligible for rebates on tax already paid— but claims can only be backdated up to six years.
Contact Howard Derham on 01983 616465.