Draft Finance Bill 2020-21: tax checks for taxi drivers and scrap metal dealers
LITRG has commented on draft legislation which aims to ensure that taxi and private hire vehicle drivers (and their operators), and scrap metal dealers, are tax compliant before they are able to renew their licences to operate.
LITRG highlights that for these measures to be successful in preventing businesses from entering the hidden economy, they must be paired with a greater focus on educating the general public about the importance of using licensed businesses in the first instance.
Under the proposed new law, licensing authorities will be required to give guidance to first-time licence applicants about their tax obligations. Before the licence can be renewed, however, the licensee must undergo a ‘tax check’ with HMRC to demonstrate that they are properly registered for tax.
LITRG has made suggestions about how the guidance given to first-time applicants must be clear, accessible and not too long. It should also take account of the fact that taxi and private hire vehicle drivers are, on average, older and more likely to be from ethnic minority groups than the general working age population.
It also highlights concerns regarding the ‘tax check’ process, including that:
- the time window for an individual to complete their tax check in cases of renewed applications is not determinable in advance by the individual;
- HMRC should be obliged to complete the tax check within a certain timeframe; and,
- the tax check seems to go far beyond the policy intent of simply checking whether the taxpayer is properly registered for tax.
The new rules are due to apply from 4 April 2022.
Read the submission here.
Our response to the December 2017 consultation on this topic is available here.