Do Drivers Still Need Accountants?
Are we needed? When this was discussed as the subject of my article this month, I was tempted to say no and retire and go fishing, but then I remembered that firstly I don’t know how to fish. and secondly, it’s essentially wrong.
Once again, I am going to refer to the oncoming Hidden Economy Conditionality Laws, there have been a few industry ‘get togethers’ in the last few months and of course (as I write this) looking forward to catching up with you at Pro Drivers QSI awards on the 25th, however in conversation with many operators, only a few have grasped the real potential problems relating to drivers having to declare their tax status.
Every tax pundit worth their salt, that knows anything about the taxi and private hire trade, is pushing operators to offer tax solutions to their drivers, normally in the form of software.
I want to speak out for accountants and explain why not using a proper accountant will be bad for your drivers and bad for you.
The Truth the Whole truth….
Firstly, from what we know, there will be five questions, two of them will in the form of:
A: Are you registered for tax?
B) How long have you had your license?
I’m sure you don’t need me to tell you that if the answers to those questions are:
A) “I registered last Thursday”
B) “yes, I have had my license for three years”
HMRC will be wondering why anyone would get a license and then not use it! There are of course drivers where this is genuinely the case, but for many drivers, they would leave the trade rather than go through what comes next.
This is the process that a tax unregistered driver goes through:
Compliance Check – Failure to notify
HMRC says:
There are certain circumstances that affect your liability to tax that you must tell us about, and you must do so within certain time limits. If you do not do this, we call this a ‘failure to notify’.
- The circumstances that you must tell us about include when you first become liable to pay tax
Compliance Check – Non-Filing penalties
HMRC says:
You’ll get a penalty if, you need to send a tax return and you miss the deadline for submitting it or paying your bill.
Sounds bad, no? But as they say in the films DON’T PANIC
Even HMRC’s own guidelines say:
You can also ask someone else to deal with us on your behalf, for example, a professional adviser.
Obviously, guys, you know I love you lots, but I am not going to share in this forum, the strategies that accountants like us, use in these sorts of enquiries. That’s my tradecraft in the same way you have yours.
However, there is a simple rule that any driver can follow to make sure the process is low impact:
- HMRC are much nicer to deal with if you introduce yourself to them than if they must come looking for you.
- There are two states that a naughty taxpayer (or non-taxpayer) can be seen as. Let’s call it negligent or malicious with intent. Basically, it’s better to be mad than bad in the eyes of HMRC.
So, with the right approach and a little forward planning, people like us, can ensure low impact and full compliance. I can’t tell you the number of times a driver leaves our office after going into this process by saying; “its like a weight of my shoulders”. Its all about the appropriate measures for the appropriate problems.
So Here are My Quick Tips on Conditionality Compliance
- Build tax training into your onboarding.
- Communicate to all your drivers about their tax status. Some will be resistant but use the right people to share the message.
- Bring in specialist HMRC enquiry back duty and failure-to-notify specialists to make sure it’s ‘No Biggie’.
- Be a helping hand and a listening ear, their problems are mostly based in tax fear. (Which isn’t a thing)
Gary Jacobs is a director of Eazitax, an industry specialist accountancy practice. He sat on the original HMRC Conditionality panel and is currently involved with the major trade bodies in The Conditionality Campaign.
