Experts warn that IR35, alongside Covid and post-Brexit regulations, is fuelling the UK’s HGV driver shortage
The government recently announced temporary visas for 5,000 HGV drivers to work in the UK in the run-up to Christmas.
The move comes after petrol stations have experienced long queues of drivers rushing to fill up their cars amid concerns of fuel shortages.
Changes to the off-payroll working rules, which came into effect earlier this year are said to be one of the three main factors (alongside post-Brexit regulations and Covid) fuelling the shortage of heavy goods vehicle (HGV) drivers.
According to a survey by the Road Haulage Association (RHA), there is now a shortage of more than 100,000 qualified HGV drivers in the UK. The figure includes drivers from the EU who had previously been living and working in the UK.
‘Chaos’ caused by IR35 reforms driving HGV crisis
New immigration rules following the UK’s exit from the single market have made working in Britain less attractive.
Meanwhile, the pandemic saw large parts of the economy shut down, travel restricted and a significant backlog of HGV driver tests.
And the “chaos” left in the wake of IR35 reform in the private sector has only added to the HGV crisis, as previously reported by Contractor Weekly here.
The introduction of IR35 reform in April 2021 shifted the responsibility for determining a contractor’s tax status to the end client.
In response to the changes, many businesses have placed all contractors engaged inside IR35 or on the payroll, which experts say has contributed significantly to the current crisis.
Businesses must rethink ‘needless, risk-averse’ IR35 decisions
Seb Maley, CEO at IR35 specialist, Qdos, said: “This is the first real high-profile example of what not to do when it comes to managing IR35 reform, along with its wide-reaching economic impact.
“Far too many businesses that once engaged contract HGV drivers as self-employed workers have handed them an ultimatum – work on the payroll or have your contract cancelled. This has led to an exodus of drivers.”
Maley urged these businesses to rethink “needlessly risk averse IR35 decisions”, stating they have a better chance of retaining the services of HGV drivers if they manage IR35 reform fairly.
He added: “The HGV crisis won’t be solved on IR35 alone, but through sound management, businesses could definitely alleviate the issues they’re experiencing and in turn, the problems the UK is facing as a result of this shortage.”
Andy Chamberlain, director of policy at self-employed trade body IPSE, echoed Maley’s concerns.
Government must clear up ‘confusion’ or risk more crises
He said: “The changes to IR35 are the forgotten factor driving the HGV crisis. The IR35 changes have already had numerous unintended consequences, from freelancers losing work left, right and centre, to many being forced into unregulated – and too often unscrupulous – umbrella companies. Now we can add fuel and food shortages to the list.
“IR35 is evidently not the only factor involved, but as research from the Road Haulage Association has shown, it is a key factor for more than half of drivers who are leaving the industry.
“This cannot be overlooked. But sadly, as with so much else to do with contractors and the self-employed, that is exactly what government is doing yet again: overlooking this vital sector.”
Chamberlain also highlighted that the IR35 reform failed to tackle the issue of disguised employment. Haulage firms now forcing drivers to work inside IR35 leaves them with the “worst of both worlds” – paying taxes as if they were an employee without receiving any rights in return.
He added: “If government really wants to resolve the HGV crisis and get food and fuel flowing again, it must address the IR35 factor.
“[…] At the very least, government must turn its attention to the mess left in the wake of IR35. This crisis is just one unintended consequence of the changes, and unless government clears the confusion after the changes, there may be more to come.”