Paying Employees

[Reens80]

Hi I started running a small food delivery business that has drivers.
They all get paid cash in hand after they have done their hours

I have created a standard contract for the drivers which also states that as subcontractors they are liable for completing their own self assessment and paying their tax with HMRC.

Please confirm that this is the correct thing to do and I need this contract in place?

Also at the end of each week they don’t really give me an invoice. I work out their hours with them and they get paid.
I record all of this on QuickBooks as an expense called “delivery services”. Should I, and is it acceptable for me to create a standard invoice for all drivers and create the invoice myself on their behalf so I can at least upload it as a bill on QB for proof. Is that required?

thank you

 

[Chris Ashdown]

You need to contact your accountant and check you are not meant to treat them as employees and take tax and NI contributions from them

It does sound like they are employees and should be treated as such.

Look up HMRC regulations on what they consider self employed

 

[Reens80]

Hmmm I wouldn’t have thought so. As the contract I used was similar to the ones that Deliveroo use for their drivers. In essence all drivers are self employed

 

[Mark T Jones]

I don't know if Deliveroo have been through the legal process.

Uber have, and lost.

But to rely on the Deliveroo test, you would need to exactly replicate their practices

 

[WaveJumper]

Take the advice above and speak to your accountant before this comes back to bite you in the backside

 

[pentel]

In essence all drivers are self employed

Do they decide their own working hours?
Do they provide their own equipment?
Can they send someone else to do the work?
Do they set the price you pay?

If so they MIGHT be self employed....

 

[brucegreig]

I don't know if Deliveroo have been through the legal process.

Uber have, and lost.

But to rely on the Deliveroo test, you would need to exactly replicate their practices

Deliveroo have been through the legal grinder, the Court of Appeal decided their drivers are indeed self-employed. The key points seemed to be:

- Riders don't have to accept jobs, and Deliveroo doesn't have to provide any work
- Riders provide their own phone and bike
- Riders set their own hours of work
- **Riders can send someone else to do the work** --> And this seems to be the crucial point, really.

(Basically the same list as Pentel already provided above)

Could be very expensive if you get this wrong: HMRC could send you a bill for lots of tax and national insurance, and you might not have the £500k or so which it would probably take to fight HMRC all the way to the Court of Appeal.

Judgment here:
https://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWCA/Civ/2021/952.html

 

[Frank the Insurance guy]

Do they decide their own working hours?
Do they provide their own equipment?
Can they send someone else to do the work?
Do they set the price you pay?

If so they MIGHT be self employed....

And.... can they say No and not carry out a delivery when you ask them to?

 

[DontAsk]

- **Riders can send someone else to do the work** --> And this seems to be the crucial point, really.

So any low life scumbag could end up delivering to vulnerable people, or does the someone else have to be known to Deliveroo?

 

[Paul Norman]

So any low life scumbag could end up delivering to vulnerable people, or does the someone else have to be known to Deliveroo?

The 'contractor' is free to send someone who may be entirely unknown to Deliveroo under the terms of the ruling. Whether, in practise, Deliveroo would accept that I don't know.

What is happening here, though, as in many sectors, is employers are wanting to employ people but wanting to use self employed status to avoid paying taxes, to avoid giving holiday pay, and to avoid the various costs of employing people.

In the case of the OP, the business has historically also wanted to avoid keeping proper records, too. At least now they seem to be willing to address that.

I would recommend putting in place decent supplier contracts, and I would require the drivers to at least complete some kind of records to claim the money.

And I absolutely would not pay them in cash. Of course, if you pay them into their bank accounts they will have to declare the income for tax too, and let's be honest, this whole scheme is about not paying tax.

 

[Newchodge]

Hi I started running a small food delivery business that has drivers.
They all get paid cash in hand after they have done their hours

I have created a standard contract for the drivers which also states that as subcontractors they are liable for completing their own self assessment and paying their tax with HMRC.

Please confirm that this is the correct thing to do and I need this contract in place?

Also at the end of each week they don’t really give me an invoice. I work out their hours with them and they get paid.
I record all of this on QuickBooks as an expense called “delivery services”. Should I, and is it acceptable for me to create a standard invoice for all drivers and create the invoice myself on their behalf so I can at least upload it as a bill on QB for proof. Is that required?

thank you

Please read the title you have given this thread. You obviously consider them to be employees, so you should pay them as such.

Hmmm I wouldn’t have thought so. As the contract I used was similar to the ones that Deliveroo use for their drivers. In essence all drivers are self employed

I don't understand why you asked the question if you know the answers.

 

[WaveJumper]

https://www.gov.uk/employment-status/selfemployed-contractor

 

[MyAccountantOnline]

Hi I started running a small food delivery business that has drivers.
They all get paid cash in hand after they have done their hours

I have created a standard contract for the drivers which also states that as subcontractors they are liable for completing their own self assessment and paying their tax with HMRC.

...

Telling someone who works for you that they are self employed and that they have to deal with their own tax and NIC doesn't make them self employed, and it doesn't mean you can avoid all of the legal responsibilities that come with employing people.

I suspect from what you have said that you should be registered as an employer, paying employees PAYE, NIC and possibly pensions, and providing all of the rights which people who work for you are legally entitled to receive.

If/when HMRC see that you've been doing this you risk having a bill for tax and penalties.

I really do strongly advise you to seek professional advice on this.

In the meantime take a look at this - Check employment status for tax - GOV.UK (www.gov.uk)

 

[Employment Law Clinic]

I have created a standard contract for the drivers which also states that as subcontractors they are liable for completing their own self assessment and paying their tax with HMRC.

Hmmm I wouldn’t have thought so. As the contract I used was similar to the ones that Deliveroo use for their drivers. In essence all drivers are self employed

If you created the contract, and it's similar to Deliveroo, and you're not Deliveroo or a employment law professional, I'm sure what you're doing will perhaps be ok. Or perhaps not.

Please confirm that this is the correct thing to do and I need this contract in place?

I would love to, but that would be stretching things, just a bit...


Just maybe you want to get your own contract for your own business, not piggyback on someone else's who probably have expensive lawyers arguing their case for them.


Karl Limpert

 

[Bobbo]

Hmmm I wouldn’t have thought so. As the contract I used was similar to the ones that Deliveroo use for their drivers. In essence all drivers are self employed

You say the contract is similar, but you talk about paying drivers for 'hours' worked. Whereas IIRC deliveroo pays per delivery. I would consider that to be a fundamental difference between the contracts.

 

[Pezza55]

I would definitely advise that you speak with your accountant. I very much believe they should be classed as employees. They can be on a zero hours contract so you are under no obligation to give them fixed hours. If they are solely delivering for yourself it would be hard to consider them as self employed.

 

[Reens80]

Thanks for all the responses.

The drivers are paid and hourly rate (different for each driver, individually negotiated) PLUS an amount per delivery (depending on distance

The drivers use their own vehicles

The drivers have no set shifts - i.e. they work when and as they can and often call up on the day last minute and say they cannot make it.

I am happy to have people on PAYE and have tried to encourage this - its is the drivers who want to be self employed, otherwise I have no drivers left

They are paid via the bank or the cash in till (however, all of it is recorded in quickbooks) as a supplier with delivery services and a generic invoice.

I will check with my accountant - in the process of finding one hence the questions