HMRC internal manual

VAT Taxable Person Manual

VTAXPER77000 - Particular trades: taxi and hire cars: are the drivers employees of the cab firm?

In order to answer this question, you will need to obtain two essential pieces of information:

  • the contract or agreement between the cab firm and the driver; and
  • evidence of how the driver is treated by HMRC for Direct Tax purposes.

Taxi drivers are rarely employed by the cab firm. You should therefore only argue that they are employees if there is clear documentary evidence to that effect: an agreement which clearly states that a contract of employment exists, and/or, evidence that the driver’s earnings are chargeable to tax as employment income. For further guidance on determining employment status, see VTAXPER32000.