Plenty of haulage businesses cover peaks and holidays with drivers supplied through intermediaries - usually a personal service company or an umbrella. Most of the time that arrangement hums along without tax drama. The off-payroll working rules, known everywhere as IR35, exist for the arrangement that is employment wearing a contractor’s clothes, and they can move the tax bill from the driver’s company to yours.
HMRC’s guidance on understanding off-payroll working sets out the shape of the regime. The rules make sure that a worker who would have been an employee if they were providing their services directly to a client pays broadly the same Income Tax and National Insurance contributions as an employee. The test looks through the intermediary - the limited company or umbrella - to the real working relationship underneath: who controls the work, who can send a substitute, who bears the financial risk.
For work carried out on or after 6 April 2021, the responsibility for deciding the worker’s employment status moved from the worker’s intermediary to the client - that is the business receiving the driver’s services. If you are the haulage firm taking the driver, you are very likely the client in this analysis.
The client-side duties apply where the client is medium or large. Small companies are carved out: where the client is small, the worker’s intermediary keeps responsibility for deciding status and operating the rules. The smallness test follows the Companies Act definition, based on turnover, balance sheet total and employee numbers. A owner-driver firm taking one occasional contractor may well be small; a regional fleet with depot staff and office workers probably is not.
Do not guess which side of the line you sit on. If you are medium or large and you treat the rules as someone else’s problem, the liability that comes back is yours.
Where the rules apply, the client must decide the worker’s status and pass that decision - a status determination statement - to the party it contracts with, and to the worker if asked. The guidance is blunt that the decision must be made with reasonable care. A blanket verdict - every contractor outside IR35 because that is convenient, or every contractor inside because it avoids thinking - is exactly what reasonable care rules out.
The statement must give the reasons for the conclusion. If the working practices change, the status needs another look; a determination made for a driver covering trunking runs does not automatically cover the same person doing multidrop under your transport manager’s daily instruction.
This is the part that concentrates minds in the haulage office. Where the rules apply and the engagement is inside IR35, Income Tax and National Insurance contributions must be accounted for broadly as if the worker were an employee. The client carries the duty to decide, to take reasonable care, to issue the statement, and to have a process for disagreements - a worker can raise a disagreement at any point until the last payment for their services is made, and you must have a way of handling it.
In plain terms: get the status decision wrong, skip the reasonable care, or ignore a challenge from the driver, and you are holding a problem that a clean process would have avoided.
HMRC provides the Check Employment Status for Tax tool - CEST - to help you make the determination, and its own guidance names it as the starting point. The tool walks through the real working arrangement: who directs the work, how it is done in practice, and the terms of the engagement. Its answer is only as good as the facts fed into it, so the person answering the questions needs to know what actually happens on the road, not what the agency contract wishes happened.
For a driver engaged through a company, ask what actually happens on a Tuesday. The honest description of the day-to-day arrangement - who allocates the work, how the driver is managed, what the engagement really looks like - is what the determination must be built on.
Where the “intermediary” is actually an umbrella company employing the driver, the driver is already inside PAYE through the umbrella, and the off-payroll analysis is different from the personal-service-company case. The compliance worry there is different too - holiday pay, minimum wage and who is really the employer - which is why umbrella due diligence sits alongside, not inside, your IR35 process.
A defensible position for a fleet using contractor drivers looks like this: a written process for status decisions made with reasonable care, a status determination statement issued for each engagement, a named person who answers disagreements within the window the guidance expects, and contracts that match what drivers really do. The haulier who can show a genuine decision trail is in a different world from the one holding a shoebox of invoices and a shrug.