REVEALED: The HMRC letter stating ‘YOU MAY OWE TAX’ set for delivery to 4,000 PHV drivers

Thousands of private hire drivers working on app platforms such as Uber and Bolt will receive letters detailing HMRC intelligence showing they’ve ‘earned money from driving customers who booked using online applications’.

The letter from HM Revenue & Customs (HMRC) also goes on to state: “We also have information that shows that you have not told us about some or all of this income. This means you may owe tax.”

Last week it emerged that HMRC were writing to as many as 4,000 private hire vehicle (PHV) drivers in a bid to claim back unpaid tax owed.

This year the tax authority introduced new tax checks that must be completed when taxi and PHV drivers renew their licences in England and Wales.

The new checks, which went live on 4 April 2022, do not include any tax calculations, but simply confirm whether a driver is registered for tax on their licensed taxi or private hire vehicle income. Drivers in Scotland and Northern Ireland will have to go through the same new licensing checks from April 2023.

The letters will be sent out over the next 17 weeks starting from 5 September. Those receiving the letters will have 30 days to respond or face a possible review of their tax affairs.

In the letter it will say: “We have information that shows you’ve earned money (income) from driving customers who booked using online applications.

“We also have information that shows that you have not told us about some or all of this income. This means you may owe tax.

“Please fill in the enclosed certificate of tax position and send it back to us by [DATE]. This is so we can help you get your tax affairs up to date.

“You may also receive a text message reminding you to get in touch with us.

“If you have income you need to tell us about

“You can tell us now by making a voluntary disclosure using our online Digital Disclosure Service. Please tick box 1 on the certificate, then go to GOV.UK and search for ‘disclosure service’.

“You’ll need a Government Gateway user ID and password. If you do not have a user ID, you’ll need to create one. To do this, go to GOV.UK and search for ‘register for online services’, then choose ‘register for HMRC online services’.

“After you tell us you intend to make a voluntary disclosure, we’ll send you an acknowledgement letter. You’ll have 90 days from the date of the letter to work out and pay any tax you owe, via our Digital Disclosure Service.

“For more information about making a voluntary disclosure, go to GOV.UK and search for ‘make a voluntary disclosure’.

“If you do not have any income you need to tell us about

“Please tick box 2 or 3 depending on your circumstances.”

The letter goes on to offer help to drivers who may find the review process ‘complicated’ and also urged those that have any ‘health or personal circumstances’ to get in touch.

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.

Who must complete a tax check and why?

You will need to complete the tax check when you renew your licence as a:

• Driver of a taxi (hackney carriage)

• Driver of a private hire vehicle (and dual licences)

• Private hire vehicle operator

• Scrap metal dealer mobile collector

• Scrap metal dealer site.

HMRC worked closely with sector representatives and licensing bodies to communicate the changes leading up to April 2022 and to support those who might be affected.

In January 2022, HMRC published full guidance on GOV.UK to help licensees and licensing bodies prepare for the new tax checks that will be introduced in Schedule 33 of Finance Act 2021. 

If you should have been registered to pay tax and have not been, HMRC will work with drivers to get them back on the right track. It’s your responsibility to get your tax right, but HMRC is there to help.

The new checks are said to be about creating a level playing field for the compliant majority in these sectors, so the majority who do play by the rules won’t be disadvantaged by the minority who do not.  

Getting a new licence: If you are applying for a licence for the first time, you will not need to complete the tax check. However, licensing bodies will direct you to HMRC guidance about your tax responsibilities and ask you to confirm that you are aware of this guidance.

Renewing a licence: From 4 April 2022, if you renew or apply for a subsequent licence under a different licensing body, you’ll have to do a tax check. You’ll be able to do this online through the new tax check digital service – when it goes live in early March.

Licensing bodies will send out clear guidance to licence holders ahead of their renewal date. HMRC has worked closely with licensing bodies, the taxi/private hire sector and their representative bodies to ensure they have the guidance and tools needed to prepare applicants for these changes, including materials translated into different languages.