Leading taxi and PHV accountant warns new HMRC TAX CHECKS should be ‘taken seriously’

A leading taxi and private hire accountant has warned drivers and operators that new industry taxi checks starting in April 2022 should be ‘taken seriously’.

Accountant Gary Jacobs has urged private hire operators to help drivers who could find themselves in potentially ‘hot water’ by making the tax checks part of their own companies' onboarding processes.

Recently HMRC released fresh details on new tax rules all taxi and private hire drivers and operators must follow when applying for a new or renewed licence on or after 4 April 2022.

The rules are changing if you’re an individual, company or any type of partnership applying for a licence for a:

• taxi driver

• private hire driver

• private hire vehicle operator

• scrap metal site

• scrap metal collector.

If a driver or operator makes an application on or after 4 April 2022 they will need to complete a tax check if they are:

• renewing a licence

• applying for the same type of licence previously held, that ceased being valid less than a year ago

• applying for the same type of licence already held with another licensing authority.

According to new HMRC advice the taxi drivers and operators must carry out the tax check themselves. They cannot ask a tax agent or adviser to do this on their behalf.

The tax check will ask questions about how the licence applicant pays any tax that may be due on income earned from their licensed trade.

HMRC are clear to stress that the majority in these sectors already pay the tax that is legally due. However, HMRC officials are now committed to levelling the playing field for compliant businesses so those who meet their tax obligations aren’t disadvantaged, or undercut, by those who don’t.

Tax conditionality is just one element of HMRC’s strategy to tackle the hidden economy, which is made up of the minority of individuals and businesses who have sources of taxable income that are entirely hidden from HMRC.

The most recent tax gap estimates the UK lost around £2.6 billion of tax revenues to the hidden economy in 2018 to 2019 – depriving vital public services of funding. HMRC estimates the hidden impact associated to the taxi, private hire and scrap metal industry could cost the Exchequer £65million each year from April 2025.

Conditionality is seen as a proportionate and cost-effective way of moving people – some of whom simply don’t understand their obligations – out of the hidden economy.

Gary Jacobs, Founder and Director of Eazitax Accountants, warned operators and drivers to take early action ahead of the new tax checks in April 2022 to mitigate against further driver shortages in the industry.

Jacobs said on social media: “The hot water that drivers and private hire companies will find themselves in should be taken seriously by the industry. Making sure that your company and your drivers are compliant with HMRC’s tax checks, should be part of your onboarding and operations processes.

“Eazitax can help companies stay compliant and in line with HMRC’s demands, in order to keep cars on the roads and legislation out of your nightmares.“