Mandatory tax checks will be imposed from April 2022 on all individuals, partnerships and companies applying for taxi or private hire licences in England and Wales.

This week the Government announced that conditionality will introduce a check on tax registration (tax check) for renewed applications in England and Wales for licences to:

  • drive taxis and PHVs (for example, minicabs)
  • operate a PHV business

This is part of the Government’s proposals to address the “hidden economy” – individuals and businesses with sources of taxable income that are entirely hidden from HMRC.

The Government said:

“The hidden economy also distorts competition and is linked to wider rule breaking and criminality, including money laundering, health and safety violations, failure to comply with employment rights, and immigration offences. HMRC is committed to levelling the playing field for legitimate businesses and has a continuing programme of operational work to tackle the hidden economy.”

Confirming that the new requirements will come into effect from April 2022, it said:

“Licensing bodies will be required to signpost first-time applicants to HMRC guidance about their potential tax obligations and obtain confirmation that the applicant is aware of the guidance before considering the application. Where the application is not a first-time application (a renewed application) the licensing body must, before considering the application, obtain confirmation from HMRC that the applicant has completed a tax check. 

 

“An applicant will carry out a tax check by providing information to enable HMRC to satisfy itself that the applicant has complied with an obligation to notify their chargeability to tax, where such an obligation applied. The check will include a question about whether income from the licensed activity has been declared to HMRC, where the applicant was chargeable to tax. The check will be completed when HMRC is satisfied the applicant has provided all information requested. 

 

“Where an HMRC failure prevents the applicant from carrying out their tax check or the licensing body from meeting its requirement to obtain confirmation of the completion of the tax check, the requirement on the licensing body to obtain that confirmation will cease to apply.”

Stephen McCaffrey

Regulatory defence barrister specialising in taxi and private hire licensing law, appeals and defence.

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