What is Continuality? (and why operators need to know about it, if they want to keep their drivers)
Since those nice app people lost their supreme court case, I have been kinda busy on my status consultancy work, so I thought for my article it would be nice to take a break and focus on the other impending horror on my mind. You’re welcome….
This is a thing that I have spoken about before but now either by hard luck or misfortune there is a whole new twist.
Firstly, after a damn hard slog through the recent pandemic, our reward as an industry that is trying to re-attract so many drivers lost to us (by necessity) to parcel and food deliveries and just plain old unemployment, the government brings us ‘Continuality’
Basically, we know that every self-employed person must do a tax return and that some people, (believe it or not) including drivers in our industry are still not known to the taxman. Which is why ‘Conditionality’ (by the way also referred to as continuity) legislation is on its way. To be fair its not so much the principal as the timing:
Conditionality will introduce a check on tax registration (tax check) for renewed applications for licences to:
- drive taxis and PHVs (for example, minicabs)
- operate a PHV business
An applicant who wishes to renew a licence will need to carry out a tax check. The licensing body (typically a local authority) will have to obtain confirmation from HMRC that the applicant has completed the check before being able to consider their renewed licence application.
The govt is doing this as a response to the hidden economy, which they believe exists as a result of a confusion and a lack of understanding about tax obligations. Making access to licenses conditional on a tax check certainly makes it more difficult for people to enter or remain as part of the hidden economy. Supposedly It also creates a more transparent industry. And as usual its not about the govts unwillingness to put resources into the HMRC its about our unwillingness to ‘dob in’ our fellow man.
According to HMRC, licensing bodies will signpost first-time applicants to HMRC guidance about tax obligations. This is to “obtain confirmation that they are aware of what is expected of them before considering the application”.
The tax check will be carried out by providing enough information for HMRC to be happy that the applicant is aware of their tax obligations and willing to do the right thing. If the licensing body is unable to obtain confirmation of tax check completion for 28 days, licenses will either be denied or will be allowed to expire.
Bang, there it is, another measure that could severely affect your company, that is not of your making. Well as the saying goes.:
Do what you can do, but don’t sweat the stuff you can’t (genuinely the worst paraphrase of Desiderata ever. Look it up).
So here is what you need to do ready for April 2022.
- Don’t be shy about sharing the information, you are genuinely helping drivers out, this does not affect your or their status, it’s just information.
- Make sure your drivers know this. Just a tiny plug- there is a ‘how to do your taxes’ downloadable video on our YouTube page.
- Make sure you incorporate this into onboarding every new driver.
- Once again asking drivers for UTR (Unique Tax Reference) Number to make sure they are registered, is not invading their rights, it is avoiding problems. Sometimes love is ‘tough love’, but the results are the same.
Things not to do.
- Ignore the problem
- Ask drivers to sign a contract to say they are self-employed, that doesn’t help them, and it certainly doesn’t help you. (no defence in a tribunal btw).
As you know we are accountants, and to put this into perspective, during the pandemic, those that were properly registered, really benefitted from then SSEIS (self employed grant), and especially those taxpayers that didn’t under declare their income benefitted in full of what the HMRC had to offer. You can’t get tax credits without it and it is hard to buy or rent big stuff without having a set of accounts even as a sole trader. In conclusion I would repeat what I said that its not so much the legislation it’s the timing for operators and their journey back to normality and driver numbers.
As they say, if you are affected by anything you read in this article, contact the writer for advice.
Drive Safe
