Last week’s court ruling that Uber drivers are employed drivers rather than being self-employed came as a surprise to many, not least Booth Ainsworth’s Employment Tax Specialist Dawn Foden-Smith .
Dawn, who deals with employment status as part of her role in the firm’s Corporate Tax team, has been closely following the recent Uber case and gives her opinion Booth Ainsworth’s latest blog.
“An Employment Tribunal has decided that Uber drivers are not self-employed, this doesn’t mean they are automatically employed for tax purposes, but the decision carries a lot of weight and I am sure HMRC will take full advantage of the situation.
Surprisingly to me, the tribunal ruling centred mainly on the level of control Uber had over the drivers. It did not take much account of the financial risk the drivers took and this has always been a significant factor in determining employment status. The drivers provided and maintained their own vehicles, paid their own running costs and profit was in their own hands because they worked as many or as few hours as they chose. When I was an HMRC Status Inspector this would be good enough for me and other status colleagues to accept self-employed status.
The consequences of the ruling are far reaching as employers must pay holiday pay, sick pay and other statutory payments, national minimum wage, national insurance contributions, set up and pay into pension auto enrolment schemes, and more.
Of course Uber will appeal and we will have to wait for the outcome of that. Nevertheless this could open the floodgates for HMRC to challenge other businesses operating in a similar way to Uber – the so called gig economy. I doubt it is coincidence that HMRC is setting a new employment status and intermediaries compliance unit. If you have doubts about the status of any of your self-employed staff, now will be the time to address this issue before HMRC comes knocking!”
Thanks to Dawn for supplying us with her Expert Opinion. Dawn is also contactable on 0161 475 1532