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VAT PRINCIPALITY: Which authority will be first to break rank and update licensing requirements?

Updated: Dec 6, 2023

At first, some of the Private Hire Vehicle (PHV) industry dismissed the judgment as a non-VAT issue and simply hoped that licensing authorities across the country would share the same opinion. However, there is now a notion of concern that once one local authority moves to make principality a licensing requirement, more will be forced to follow.

It’s worth noting that Transport for London (TfL) HAS already made it a requirement after a similar ruling. In 2022, TfL publicly warned all PHV Operators to take ‘IMMEDIATE ACTION’ to make the changes to their terms and conditions and ensure compliance. It remains unknown what percentage are now compliant, but the big operators are.

That shift came soon after a High Court judgment that ruled London PHV Operators should contract directly with passengers rather than through its drivers. Operators were also told they must ensure that passengers have appropriate legal recourse in the event that something goes wrong during a private hire journey.

Almost all TfL’s 1,800 licensed operators would have been required to move to the new model of operation having worked under the previous model since the industry first came under regulatory supervision in 2002.

The Mayor of London, Sadiq Khan, was also pressed on the matter in May 2022. He said: “The Court’s judgment is clear that in order to operate lawfully under the Private Hire Vehicles (London) Act 1998 a licensed operator who accepts a booking from a passenger is required to enter into a contractual obligation with the passenger to provide the journey which is the subject of the booking.

“It is the responsibility of all London private hire vehicle (PHV) operators to familiarise themselves with the judgment and to ensure they are compliant with it.”

So, the question remains, why are licensing authorities not acting three months on from the judgment?


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