The Uber tribunal case has once again highlighted the importance of knowing whether you’re hiring someone as an employee or a self-employed contractor.

For those of you who don’t know Uber is a Taxi Booking App which, until recently, took bookings and payment on behalf of “Self-Employed” taxi drivers. A couple of the drivers didn’t agree with this and, with the help of a friendly union, have successfully managed to argue at an employment tribunal that they are in fact employees. That’s great news for them; holiday pay, sick pay and minimum wage await, but unfortunately it is really bad news for Uber and for many other businesses as this case has profound tax implications.

“What’s the problem?” I hear you ask, “tax is tax and someone’s paid it” and to a degree that’s true, the problems Uber now have are:

  1. A minimum wage breach, resulting in penalties
  2. A payroll being run incorrectly, resulting in penalties
  3. And most importantly, no one has paid anywhere near enough National Insurance, with employees’ contributions at 12% and employer’s contributions at 13.8% the result is a massive underpayment with interest and, wait for it, PENALTIES!!!!

And although HMRC has no opinion on the case, the Treasury will no doubt be grateful for the extra revenue. Uber are appealing the decision and we’ll have to wait for the outcome. In the meantime, we strongly recommend that you spend a little time and consider whether that person you’ve just paid is your employee or not, as getting it wrong can be costly.

Call our tax team if you would like advice on this. We can be contacted on 01642 244 090.