The IR35 reforms may have come into effect in April 2021, but a lot of transport companies are still figuring out the best way to achieve compliance efficiently. Add to this, the umbrella company liability reform became live in 2026, meaning that agencies and the end hirer become jointly and severally liable.
In this blog, we take a look at how hauliers can stay on top of their liability and capture evidence of compliance.
IR35: Five years on
IR35 rulings relate to the UK’s off-payroll working rules – meaning that contractors falling within IR35 do not meet HMRC’s definition of self-employed, and therefore, would pay the same tax and National Insurance as a standard employee.
IR35 is particularly relevant for transport companies, as traditionally they work with a lot of subcontractors or owner-drivers who operate through limited companies.
Prior to April 2021, the owner-driver was responsible for determining their IR35 status, but now the liability lies with the fee payer (in this example, the transport company) employing them. Worth noting here that this only applies to medium/large operators, which translates to meeting at least two of the below conditions:
- £10.2m+ turnover
- £5.1m+ balance sheet
- 50+ staff
April 2026 saw this change again, though via a different mechanism rather than an extension of IR35 itself: a new umbrella company tax reform focused not on classifying a worker’s employment status, but on whether the PAYE tax deducted by umbrella companies – the payroll intermediaries many agencies use to pay subcontracted and temporary drivers – is actually paid over to HMRC.
The timing isn’t a coincidence: some operators responded to the 2021 reform by moving owner-drivers into umbrella-paid PAYE structures specifically to sidestep IR35 classification risk, and from April 2026 that “safe” option carries its own distinct compliance exposure instead.
Owner-driver vs. disguised employment under IR35
Because the liability for getting this classification wrong now sits with you rather than the owner-driver, it pays to know exactly what a genuine subcontractor relationship looks like under IR35 – and what doesn’t.
To avoid getting caught out, there are a few signs you can look out for that likely point to a genuine subcontractor business, such as:
- Their own O-licence
- Their own insurance
- Multiple different clients
- Real right of substitution
- Bears their own costs and risks
On the reverse, be on guard for red flags that could point to disguised employment, such as:
- Exclusivity
- Routes/hours dictated by one operator
- No real investment or risk carried
But be wary of long-term “exclusive” owner-drivers and agency-supplied drivers without proper paperwork – these are grey areas that could trip you up.
Below, we’ve shared an IR35 compliance checklist that you can follow to give you peace of mind that you’re working with the right people in the right way.
A practical IR35 compliance checklist for operators
- Audit your current subcontractor base against the same four factors that HMRC use:
- Control – are you dictating how, when, and where the driver works, or does the driver decide for themselves?
- Substitution – could they send a substitute of their own choosing, even when they’re available to do the job themselves, and would you accept that substitute (subject to reasonable checks like licence and insurance)?
- Financial risk – do they bear the costs if the job goes wrong?
- Mutuality of obligation – do you feel obliged to keep offering them work, and are they obliged to accept it – or could they turn work down, or work for other operators, without it affecting the relationship?
- Formalise and document the Status Determination Status (SDS) process so it is standardised across the business
- Centralise subcontractor documents with expiry tracking instead of spreadsheets or filing cabinets
- Set alerts for documents that are due to lapse, so you’re not chasing them after they’ve already expired
Where technology closes the gap
As a haulier, the right TMS helps you reduce risk and spot compliance gaps before they become a live liability. Spreadsheets, email threads and filing cabinets full of insurance certificates and licence copies have no structured expiry tracking and no way to flag a lapsed document before it’s already a problem.
In Qargo, you can centralise this information in one place instead. Every compliance document on a driver, vehicle or subcontractor record can carry a validity period, so you can see at a glance when a certificate is due to expire – or already has. You can also set the resource to automatically become unavailable for planning once that date passes, which stops a subcontractor with an expired licence or insurance certificate from being wrongly dispatched.
Dedicated dashboards for resource expiration and resource validity give you a proactive, exportable view of what’s coming due across your whole subcontractor base, rather than checking documents one by one. And pincode-based mobile access means subcontracted drivers can be brought into the system quickly for a specific job, without a full account needing to be set up every time.
With everything centralised, you can cross-check a subcontractor’s documents and status in one place rather than piecing it together from email – and changes to a subcontractor’s own record, including their status, are logged with a timestamp and the user who made the change, giving you a clear history to point to if it’s ever questioned.
In summary
IR35 and the new umbrella company reform are two separate, overlapping regimes, and both are live, not hypothetical. Between them, hauliers now carry real exposure for getting owner-driver classification wrong and for the PAYE compliance of any agency or umbrella company in their supply chain. HMRC can pursue the haulier directly in either case, without needing to prove fault.
The practical response is the same either way: know where each subcontractor relationship stands against the four tests, formalise your Status Determination Statement process, and keep the paperwork behind it centralised and current rather than scattered across inboxes and filing cabinets.
Ready to tighten up your subcontractor compliance? Get in touch with the Qargo team today.
