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New mandatory taxi and minicab TAX CHECKS must not become a ‘barrier to entry’ says representative

Image credit: HMRC

An industry representative has warned the new taxi and private hire TAX CHECKS arriving next year should not become a ‘barrier to entry’ to drivers.

Steve Wright, Licensed Private Hire Cars Association (LPHCA) Chairman, also deemed it ‘critical’ that licensing authorities are fully up to speed with the new mandatory licensing requirements when they go live in April 2022.

As part of the new checks, cabbies will be asked to provide details on when they first received their licence and how long their most recent licence is or was valid for.

Jamie Horton, HMRC Assistant Director, Hidden Economy, Customer Compliance

Group, detailed the process taxi drivers and those working in the private hire sector must take from April 2022 during the Licensed Private Hire Car Association (LPHCA) Road Show.

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

From 4 April 2022 licensing bodies will be required to signpost first-time applicants to HMRC guidance about their potential tax obligations and gather confirmation that the applicant is aware of the guidance before considering the application.

Where the application is not a first-time application, for example a renewed application, the licensing body must, before considering the application, obtain confirmation from HMRC that the applicant has completed a tax check.

The driver must then digitally run through questions on the subject of past and current employment and receive a ‘Tax Check Complete’ code to then forward to the licensing authority.

Within the tax check, taxi drivers who hold a taxi licence, but currently work elsewhere outside of being a cabbie, will be able to detail the other employment.

At the LPHCA Road Show there were however worries over how prepared the industry was for the changes. Concerned driver representatives were keen to warn the checks should not become a barrier to entry.

Steve Wright, LPHCA Chairman, said: “It’s absolutely critical that a) we make the industry aware that this is coming because we don’t want it to be a barrier to entry to the drivers, and b) the licensing authorities are up to speed on this.”

Wright finished by saying “we do not need another delay” pushed onto the drivers’ licensing process.

What’s changing?

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.

Image credit: HMRC

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.

After completing the tax check the applicant will be given a 9-character tax check code. Drivers and operators will need to give the code on their application to the licensing authority, so they can confirm a tax check has been carried out.

Most importantly HMRC say no licence will be granted if no tax check code is given to the respective licensing authority.

Guidance about how to complete a tax check will be published in January 2022.


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