In light of this verdict, HMRC could go after businesses that depend on a self-employed workforce and those failing to comply may be faced with interest and penalties of up to 100% of the outstanding tax liabilities, say chartered accountants Blick Rothenberg LLP.
Gary Gardner, tax dispute specialist partner at Blick Rothenberg, said that the tribunal ruling will "directly impact the 30,000 self-employed drivers and may also affect the employment status of the tens of thousands working under similar conditions."
“This landmark ruling has very much put the gig economy into the spotlight and strengthened HMRC’s hand in terms of challenging the employment status of those currently considered to be self-employed.”
He advises: “Businesses that depend on a self-employed workforce should review their arrangements to ensure they can withstand scrutiny from HMRC. Incorrect classification can result in the employer or contractor being held accountable for any tax and/or NIC not deducted. This could include interest and penalties of up to 100% of the outstanding liabilities.”
Today’s decision has arrived hot on the heels of the announcement made last week by Jane Ellison, financial secretary to the Treasury, that HMRC has launched a specialist unit to investigate companies who opt out of giving workers employment protections by using agency workers or calling them self-employed.
Ellison’s announcement followed pressure from Frank Field MP about his concerns with the employment status of delivery drivers and other operators in the so called ‘gig economy’. The ‘gig economy’ is characterised by short-term temporary contracts with workers who are classed as self-employed and have none of the rights and protections of employment such as, minimum/living wage, sick pay, holidays and pensions.