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HAULAGE

5th November 1998
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BULLETIN

NOVEMBER 1998

Self-employment and benefit fiddles

A recent multi-agency roadside enforcement check on goods vehicles revealed, among a wide range of other punishable offences, that maimdrivers are working illegally while still drawing unemployment benefit (iobseekersi allowance). Some people are also not clear what "self-employed" means. Haulage Bulletin tries to untangle some of the legalities.

Jobseeker's allowance It is an offence under the Social Security Administration Act 1992 (sections 110 and 111) to be employed while drawing unemployment benefit The employer faces fines of up to ,E2,000 and six months in prison on conviction, and the individual offender can be penalised very heavily, depending on the extent of the fraud, and also risks a period of imprisonment.

Self -employment and owner-drivers Although not necessarily brought to light in these particular enforcement purges, another well-known road haulage industry illegality is where drivers erroneously believe themselves to be self-employed ownerdrivers—something many aspire to.

However, it is a widespread myth that to work for yourself is to be free to do as you please, unfettered by the demands and whims of an employer. Far from it: the self-employed are always at the beck and call of their customers—when they say jump, you jump, otherwise your next destination will he the job Centre.

Besides not being the nirvana widely imagined, working for yourself is beset by a multitude of tortuous rules and requirements, not least those imposed by the Inland Revenue and the DSS. These are first, to determine whether you really are self-employed, and second, to ensure you do not, accidentally or otherwise, miss paying your due taxes and national insurance contributions. Many so-called self-employed workers are in fact not legally self-employed at all under these rules. And in road haulage this may apply in even more ways. For example, the driver who buys a truck from his employer, paying out of earnings as he goes for the vehicle, fuel, insurance and so on, is not self-employed at all if the employer continues deducting his income tax and national insurance contributions, or rigidly controls his actions.

Furthermore, since the employer is still legally the user of the vehicle (if he pays the driver's wages), it is he who must hold the 0-licence for the vehicle, unless it is exempt from licensing. Conversely, if the ownerdriver is genuinely self-employed, then he cannot legally operate under the haulier's 0-licence.

It is important to resolve the legal position about self-employment, because to be caught out later by the Traffic Commissioner on the 0-licensing issue, or by the Inland Revenue or DSS on tax and national insurance matters, can mean considerable hassle and very heavy financial penalties.

The DSS is known to pounce readily on haulage firms for back payment of the employer's share of national insurance contributions for owner-drivers they consider wage-earning employees rather than self-employed sub-contractors.

Although the DSS and the Inland Revenue do not

appear to have a coherDrivers: You ent definition for this might think role, under tax law selfyou're self employed persons are employed those who, broadly when speaking, work under you're not. contract for the provi

sion of their services; and are free under the contract to send another person in their place to fulfil those services.

A contract for these purposes is not necessarily in writing or involving a longterm commitment, but broadly is simply an agreement for the self-employed person to provide his services for an agreed price.

In addition, self-employed persons are not constrained by customers as to: • the way they carry out the work; • the actual hours they work; • when they take their breaks; • when they take their holidays.

They have no entitlement to payment by the customer for annual or public holidays, or while off work through sickness. They also have no statutory rights under employment legislation, and no right to claim redundancy payments.

Where these conditions cannot be satisfied, individuals should not consider themselves legally selfemployed. Any firm employing them as sub-contract owner-drivers should treat them as employees, including them in the PAYE scheme, deducting income tax from earnings and ensuring employee and employer national insurance contributions are properly made.

Construction & Use: New regulations

Two sets of regulations have been issued recently:

• Motor Vehicles (EC Type Approval) Regulations 1998 (SI 1998 No 2051) came into force on 23 September (£3.70); • Road Vehicles (Construction and Use) (Amendment) (No 6) Regulations 1998 came into force on 1 November 1998 (.£1.10).

Both are available from the Stationery Office. Tel: 0171 873 0011.

EU Regulations: Recovery of tax

Customs & Excise (C&E) is consulting on a proposal by the European Commission to amend the rules governing the right to deduct, as input tax, VAT incurred in the course of business. The proposal comprises two elements: • to allow companies to recover the tax through their VAT returns in a member state where they are already registered for VAT, rather than claim a refund from the state where the tax was charged; and • to harmonise the rules on expenditure which is not eligible for full input tax deduction (including cars and motoring expenses, and expenditure incurred on accommodation, food and drink, luxuries, amusements and entertainment).

VAT European Commission Proposal for Revised Rules on Input Tax Deductions is available from Alison Duffy, Customs & Excise, EC Branch, VAT Policy Directorate, 4th Floor West, New King's Beam House, 22 Upper Ground, London 5E1 9PJ. Tel: 0171 865 5318.

Alternatively, visit the Web site at: www.hmce.gov.uk.

Comments should be sent to Duffy by 11 December 1998.

Health & Safety: Well equipped'?

Two new sets of regulations, the Provision and Use of Work Equipment Regs (PUWER) 1998* and the Lifting Operations and Lifting Equipment Regulations (LOLER) 1998** are due to come into force on 5 December 1998. This wide-ranging legislation will affect almost every business and service in Britain.

PDWER 1998 replaces PULVER 1992 and the Power Press Regulations 1965 and 1972, and contains new specific requirements to control risks from mobile work equipment, such as the risks from roll-over. LOLER 1998 will replace, in one set of regulations, the various pieces of legislation relating to lifting equipment.

*Price £3.70 from the Stationery Office. **Price £2.80 from the Stationery Office.

Staying Calm The Health and Safety Executive (HSE) has published Help on work-related stress--a short guide*, set out in question-and-answer format, listing the main factors contributing to work-related stress and advice on how to deal with it * Available free (or for £5 for a pack of 10) from HSE Books, PO Box 1999. Sudbury, Suffolk C010 6F'S. Tel: 01787 881165.

Environmental: Risk reduction 13 The Department of the Environment, Transport and the Regions has welcomed new Guidelines for Public Liability Insurance against Pollution, published by the Association of British Insurers. The guidelines are designed to help insurers identify companies that have a high risk of making large pollution liability claims.

The guidelines suggest that businesses that manage their environmental risks effectively should pay lower insurance premiums, and makes the point to companies that: • it pays to prevent loss and minimise risk, rather than ignore risk and then make heavy insurance claims; • failure to reduce risk and prevent loss will result in higher insurance costs; and • poor performance may result in limited insurance cover, leaving companies exposed to potential loss and high Compensation costs for pollution damage to the property or health of others.

Company & Financial: Minimum wage

The Low Pay Commission has published The National Minimum Wage—First Report The report contains written of the Low Pay Commission*, evidence the Commission received during its consultation on the minimum wage.

In addition, the Department of Trade and Industry (DTi) comes to the end of the consulting period on 6 November for secondary legislation in the form of regulations** which will implement the provisions of the National Minimum Wage Act 1998. The document asks how the regulations can best implement the provisions of the act.

* Available, price £2L60, from the Stationery Office. Alternatively, visit the Web site at www.lowpaygov.uk.

** Draft National Minimuni Wage Regulations are available free. Tel: 0870 1502 500.

National Insurance The Department of Social Security (DSS) has laid regulations* before Parliament which make amendments to the Social Security (Contributions) Regulations 1979 (as amended).

The regulations introduce a number of changes aimed at maintaining general alignment with tax positions and preventing avoidance of payment of National Insurance contributions.

The regulations cover: the payment of travel and subsistence expenses; the assessment of NICs for company directors; Class 1A rounding; and payments in non-cash form, ie readily convertible assets or payments by way of shares subject to forfeiture of conversion.

The new regulations came into force on 1 October 1998 and take effect between 9 April 1998 and 6 April 1999.

*Social Security (Contributions) Amendment (No 3) Regulations 1998 (SI 1998 No 2211) are available, price £2.40, from the Stationery Office.

CM's Haulage Bulletin is put together in association with Tolley Publishing, which produces regular monthly business bulletins offering need-toknow information on many areas, including: °Company law :3 Health and safety L_3 VAT law

i) Environmental issues .) Tax and accountancy Payroll issues.

Tolley is also publisher of the Haulage Handbook, a new kioseleaf publication covering all aspects of haulage law, including weights and dimensions, driving hours, licensing, international operations, vehicle loading. tachographs and vehicle maintenance. The handbook is currently available at the special price of £95 (full price £135).

For more information, call Tolley no s on 0181 686 91


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