I have had to go limited as a driver. Does anyone have a link(s) to templates i can use to write up a work contract for my customers
Can’t help with the contract mate but why do you “have to go” Ltd? If it’s your decision then fair enough, but it sounds from your post that you are being coerced into it?
Get yourself a good accountant!!
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To be a LTD driver you need to use an agency, or you will be a disguised employee.
If you go directly to a client as a LTD driver, this will be illegal and you could end up owing HMRC a lot of money…tax, interest, fines, etc. This is because HMRC will regard you as a disguised employee. You can read up on intermediary legislation. This is where if it wasn’t for your LTD company you would be regarded as an employee. HMRC don’t like people being disguised employees as they miss out on the extra tax revenue that employees provide.
Read up on HMRC’s IR35 legislation. One important test to show that you are not a disguised employee, is if you can substitute someone else to go in for the day and do your job. If the client asks for Tom to go in on Monday can you send ■■■■ instead. If the client asks if ■■■■ can go in on Tuesday, can you send Harry instead? By working through an agency, the agency decides who to send in whenever the client asks. Sometimes the client may ask for a favourite driver, but the agency can send in who they want to cover a shift. The client may ask for 10 drivers to be sent in on Monday, and the agency will send in 10 drivers of their choosing not the clients choosing. Hence, by using an agency you will often be substituted by another driver. This means that you aren’t an employee of the client.
If you supply your services directly to the client and not through an agency you will be a disguised employee and you will have to pay taxes as an employee. ie. 20% income tax, 12% employee’s national insurance, 13.8% employer’s national insurance, and you will probably have to pay pension contributions of at least 5% plus an employer’s contribution of at least 3%. So make sure you are not a disguised employee.
I suggest that you phone HMRC and ask them if this LTD company arrangement that you are being forced into is legal and whether you will be pursued in the future by HMRC for unpaid taxes as a disguised employee, such as income tax at 20%, employee’s national insurance at 12%, and employer’s national insurance at 13.8%, etc. The pensions regulator could also come after you for the minimum 5% employee’s pension contribution plus the 3% employer’s pension contribution.
You also need to be aware of MSC (Managed Service Company) legislation. This is where you let some kind of accountancy/service company manage your LTD company. If anyone other than yourself is named on your limited company’s details on the Companies House website, such as a secretary, then you could fall foul of the MSC legislation. If someone says, don’t worry we’ll do everything for you, then they are managing your company and not you. You will fall foul of this legislation. Some LTD drivers have fallen foul of this legislation and now owe HMRC tens of thousands of pounds, even many years after their Limited Company was set up for them by someone else. This person or company that had helped set up their limited company and/or running it having long disappeared into the sunset and leaving them with huge debts owing to HMRC. If fact, some of these so called accountants/service companies have told LTD drivers that they have paid HMRC the taxes that they owed when in fact they had pocketed the money themselves and not passed it on. HMRC then come knocking demanding that these taxes be paid. It’s no excuse to say that you had thought your accountant was going to pay. These accountants have been known to steal all the money from the LTD driver’s business bank account. These accountants might even do everything correctly in the beginning to build up trust and then steal from 100 drivers in the scheme all at once and do a runner with all the cash. If it sounds too good to be true, it probably is. There was a big scam not many years ago where drivers were being forced into limited companies and then after a year of so, hundreds of drivers had their business bank accounts emptied and their taxes not paid. Think BBC watchdog type programme.
Here’s a phone number that I found for HMRC. This one is to do with income tax, but they can give you the correct phone number if it’s wrong so that you can speak to the correct department about your concerns:
Telephone:
0300 200 3300
To summarise…don’t bother [emoji23]
Why do you need to go Ltd?
Who said you should?
Are there any alternative options such as PAYE?
You’d need a solicitor to figure that out as it’d depend on so many factors such as whether you own the truck, subbie it from someone or just drive for them.
Plus needs clauses for indemnity and what is / isn’t covered by your own insurance, payment schedules, late payment schedules, what jurisdiction your contract comes under (England, Scotland etc).
And a whole lot more. A lot don’t bother but many of those can skip the country or are just hoping they don’t get sued after a claim…or by HMRC.
PS, we’ll leave a space for the next question in 2021.
dracken:
I have had to go limited as a driver. Does anyone have a link(s) to templates i can use to write up a work contract for my customers
These are what I used.
Backside covering Terms and Conditions of Business. Clause 6, specifically 6a is your get out of jail if you damage something and clause 6b makes them responsible for covering you under their public liability insurance.
Use these, change the business name as required. Make sure every customer you take on signs a copy. This sets out how many days they have to pay an invoice with a penalty set out if they pay late, a minimum payment if they cancel at short notice, the fact they’re required to make sure the vehicle is fully insured and that you’re not liable for any costs, damage or loss of profit for anything you do or any driver you send in does.
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Terms of Business for the supply of Temporary Drivers
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These Terms and Conditions of business are between (hereinafter called the ‘EMPLOYMENT BUSINESS’) and the hirer hiring the temporary driver (hereinafter called the ‘CLIENT’).
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These Terms and Conditions are deemed to be accepted by the Client by virtue of an interview of the engagement by the Client (which term includes employment or use whether agency, licensee, franchise or partnership agreement) of a temporary driver (hereinafter called a ‘TEMPORARY WORKER’) introduced by the Employment Business.
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The Client agrees to pay the hourly charges of the Employment Business as notified at the commencement of the Assignment and as may be varied from time to time during the Assignment. The charges are calculated according to the number of hours worked by the Temporary Worker (to the nearest quarter hour). The charges are compromised mainly of the Temporary Worker’s remuneration but also include the Employment Business’ commission, employer’s national insurance contributions and any travel, hotel, parking, tolls or other expenses as may have been agreed with the Client or, if there is not such agreement, such expenses as are reasonable. The charges are invoiced to the Client on a weekly basis and are payable within 30 days unless agreed otherwise. The Company reserves the right to charge interest on any overdue amounts at the rate of up to 8% per annum above the base rate of Barclays Bank PLC from time to time, from the due date until the date of payment.
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The Employment Business assumes responsibility for payment of the Temporary Worker’s remuneration and where appropriate, for the deduction and payment of National Insurance Contribution and PAYE Income Tax applicable to the Temporary Worker.
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The direct Engagement by a Client of a Temporary Worker introduced by the Employment Business, of the introduction by the Client of a Temporary Worker to any third party resulting in an Engagement (or, where applicable, if the Temporary Worker has become incorporated under a limited company, the Engagement of that limited company) renders the Client subject to the payment of an introduction fee calculated at 15% of the annual gross taxable remuneration and emoluments payable to the Temporary Worker, provided that the Engagement takes place within a period of 3 months from the termination of the Assignment under which the Temporary Worker was last supplied, or if there was no Assignment, within 3 months of the introduction of the Temporary Worker by the Employment Business. Where the Client fails to inform the Employment Business of the annual remuneration, the introduction fee will be calculated by multiplying the hourly rate agreed between the Client and the Employment Business by a figure not exceeding 200. No refund of the introduction fee will be paid in the event that the Engagement subsequently terminates.
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Whilst every effort is made by the Employment Business to give satisfaction to the Client by ensuring reasonable standard of skills, integrity and reliability from Temporary Workers and further to provide them in accordance with the Client’s booking details, the Employment Business is not liable for any loss, expense, damage or delay arising from any failure to provide any Temporary Worker for all or part of the period of booking or from the negligence, dishonesty, misconduct or lack of skill of the Temporary Worker. For the avoidance of doubt, the Employment Business does not exclude liability for death or personal injury arising from its own negligence.
a) Temporary Workers are engaged by the Employment Business under Terms of Engagement. They are deemed to be under the supervision, direction and control of the Client from the time they report to take up duties and for the duration of the Assignment. The Client agrees to be responsible for all acts, errors or omissions of the Temporary Worker, whether willful, negligent or otherwise as though he was on the payroll of the Client. The Client will also comply in all respects with all statutes including, for the avoidance of doubt, the Working Time Regulations and requirements of vehicle insurance under the Road Traffic Act , by-laws, codes of practice and legal requirements to which the Client is ordinarily subject in respect of the Client’s own staff (excluding the matters specifically mentioned in Clause 5 above), including in particular the provision of adequate Employer’s and Public Liability Insurance cover for the Temporary Worker during all Assignments. The Client shall also advise the Employment Business of any special health and safety matters about which the Employment Business is required to inform the Temporary Worker. The Client will assist the Employment Business in complying with the Employment Business’ duties under the Working Time Regulations by supplying any relevant information about the Assignment requested by the Employment Business and the Client will not do anything to cause the Employment Business to be in breach of its obligations under these Regulations. Where the Client requires or may require the service of a Temporary Worker for more than 48 hours in any week, the Client must notify the Employment Business of this requirement before the commencement of that week.
b) The Client shall indemnify and keep indemnified the Employment Business against any costs, claims or liabilities incurred by the Employment Business arising out of any Assignment and/or as a result of any breach of these Terms by the Client.
- The Client undertakes to supervise the Temporary Worker sufficiently to ensure the Client’s satisfaction with the Temporary Worker’s standards of workmanship. If the Client reasonably considers that the services of the Temporary Worker are unsatisfactory, the Client may terminate the Assignment either by instructing the Temporary Worker to leave the Assignment immediately, or by directing the Employment Business to remove the Temporary Worker. The Employment Business may in such circumstances reduce or cancel the charges for the time worked by that Temporary Worker, provided that the Assignment terminates:-
a. within four hours of the Temporary Worker commencing the Assignment where the booking is for more than seven hours; or
b. within two hours for bookings of seven hours or less. And also provided that notification of the unsuitability of the Temporary Worker is confirmed in writing to the Employment Business within 48 hours of the termination of the Assignment.
c. Any of the Client, the Employment Business or the Temporary Worker may terminate an Assignment at any time without prior notice and without liability.
8.a. Temporary Workers engaged by the Employment Business under Terms of Engagement are deemed to be under the direction and control of the Client, from the time the Temporary Worker reports to take up duties and for the duration of the assignment and the client agrees to be responsible for all acts, errors or omissions be they willful, negligent or otherwise as though the Temporary Worker were on the Payroll of the Client and the Client will in all respects comply with all statutes, by-laws, codes of practice and legal requirements to which the Client is ordinarily subject in respect of the Client’s own staff, including in particular the provision of adequate Employer’s and Public Liability Insurance cover for the Temporary Worker during all assignments but excluding the matters specifically mentioned in Paragraph above.
8.b. The Client shall indemnify and keep indemnified the Employment Business against any costs, claims and liabilities incurred by the Employment Business arising out of the assignment.
8.c. These Terms are governed by the Law of England and Wales jurisdiction of the Courts of England and Wales .
9.No variation can be made to these terms without the written consent of the proprietor.
Signed for and on behalf of the client:
Organisation Name:
Signed:
Print Name:
Date: