HMRC review more than 120,000 taxi licences since new TAX CHECKS were introduced in April 2022

HM Revenue and Customs (HMRC) have reviewed more than 120,000 taxi licences in England and Wales since new licensing tax checks were introduced in April 2022.

The new tax checks must be completed when people renew their licences to drive taxis, or drive and operate private hire vehicles, in England and Wales.

The new mandatory checks arrived on 4 April 2022. They do not include any calculations and simply confirms whether a driver is registered for tax on their licensed taxi or private hire vehicle income.

HMRC told TaxiPoint that the ‘majority of feedback has been positive’. The number of tax codes obtained by the tax authority includes multiple licence holders, which means the number of checks completed does not represent the number of people holding a relevant licence.

The check is designed to be quick and straightforward, the online process should only take a few minutes and will only be required every few years. It forms part of a much wider range of checks that licensees are already required to carry out.

A HMRC spokesperson told TaxiPoint: “More than 120,000 tax checks have been completed since April 2022 and the majority of feedback has been positive. We’re continuing to engage with the taxi sector and local authorities.”

The policy was introduced with the aim of creating a level playing field for the compliant majority, so the majority who play by the rules won’t be disadvantaged by the minority who do not.

HMRC are said to be aware of some people who are operating in the hidden economy who may not be doing so deliberately, many so because they are unaware of or unsure about their tax obligations. Conditionality is therefore seen as an innovative, cost effective and simple way to tackle this part of the tax gap, preventing people entering the hidden economy.

What is a ‘tax check’?

A tax check confirms that you’re registered for tax, if necessary. It will ask questions about how you pay any tax that may be due on income you earn from your licensed trade.

You must carry out the tax check yourself. You cannot ask a tax agent or adviser to do this on your behalf.

After you complete the tax check you’ll be given a 9- character code. This is your tax check code. You must give it to the licensing authority with your licence application — they will not be able to process your application without it.

Tax check codes expire after 120 days, so if you make a licence application for another licence after that time, you’ll need to carry out a new tax check for it.

If you’re a partner making a licence application on behalf of a partnership you must complete a tax check for yourself. Your licensing authority will tell you if any other partners also need to complete a tax check.

Your licensing authority will need your tax check code before they can consider your licence application.

What if I’m applying for more than one licence?

You can use one tax check code for more than one licence application, as long as all the applications are for the same type of licence (for example, they are all for taxi driver licences but with different licensing authorities).

If you’re applying for different types of licence (for example, a private hire driver licence and a private hire vehicle operator licence) you must complete a tax check for each one.

Renewing Hackney Carriage driver and scrap metal dealer licences

Your existing licence may be extended until a final decision whether to grant your licence application has been made (including a decision on appeal).

However, if you do not give the licensing authority a valid tax check code your licence will expire on whichever of the following dates is the latest:

• 28 days after the licensing authority asked for your tax check code

• the date your licence expires.