MANDATORY TAX CHECKS: New Scotland and Northern Ireland taxi driver tax checks set to arrive in 2023

New tax checks for taxi drivers and private hire drivers in Scotland and Northern Ireland are set to arrive in April 2023.

The Low Incomes Tax Reform Group (LITRG) has responded to HMRC’s consultation on extending the principle of tax conditionality, where the renewal of certain public sector licences, which includes taxi and private hire licensing, is conditional on demonstrating registration for tax, to Scotland and Northern Ireland from April 2023.

Similar measures have already been legislated for England and Wales and will apply from April 2022. The new tax check policy will affect all drivers of taxis or private hire vehicles and companies operating a PHV business.

The fresh measures come as HMRC seeks to clamp down on lost revenue in the ‘hidden economy’. The new policy could also affect licensing bodies that administer licence applications.

An LITRG spokesperson said: “We agree that if tax conditionality is to apply at all, it should apply across the whole of the UK. However, we stress that for tax conditionality to be a success, it needs to be paired with a greater focus on educating the public about the importance of using licensed businesses in the first instance.

“HMRC should also review the effectiveness of the measure as will apply in England and Wales and ensure any lessons are learnt before extending it to the rest of the UK.”