Determining whether someone is a self-employed contractor or an employee of your company can have huge tax implications on your company. Uber has recently lost a case in an employment tribunal where drivers took them to court for basic employment rights such as National Minimum Wage and holiday pay. The company has always maintained that its 40,000 drivers are self-employed contractors and not workers or employees. Uber could now face an estimated £13 million a month bill for NIC contributions as well as huge VAT liabilities. In a recent employment tribunal between Uber and some of its taxi drivers the tribunal ruled that as they were working most of their time as drivers for Uber they were employees. This means that Uber will have to grant its drivers basic employment rights such as the National Minimum Wage and holiday pay. Uber are bound to appeal the ruling, but HMRC will be ready to pounce and demand that Uber applies PAYE tax and NI contributions on the drivers’ income. It also has implications for VAT, as most drivers would be earning under the £83,000 threshold for VAT and therefore little, if any, VAT is likely to be collected currently on the fares. If the drivers are employees then Uber will have to pay up to a sixth of the total value of the fares in VAT. It is important to make sure that you are fully aware of all the legislation regarding your companies’ workers and their rights. We have put together a quick guide to help you review your arrangements with workers who are not on the payroll to ensure you are not at risk with HMRC. 1 No Risk- if a worker provides his or her services to you as a company or partnership but may also sub-contract work to others or is free to turn work down if he desires, then the onus is on them to make PAYE tax and NI contributions, and therefore of no risk to you. 2 Low or No Risk– if you pay someone on a regular basis for a combination of goods or services this could be a problem, but it would not be if you used them on an ad hoc basis. 3 High Risk – if someone works for you on a regular basis or supplies services to you on a regular basis and does not sub-contract to anyone else, you may need to consider if you need to make them an employee and put them on your payroll. The S4B Team We are Chartered Accountants in Maidenhead who understand how to help you get the most from your business and can help you make the right decisions by providing key accounting and tax advice. To make sure you are aware of all your tax liabilities contact one of the S4B team at [email protected] or call us on 01628 623444.