HMRC has announced that a tax check will take place when people renew their licences to drive taxis, drive and operate private hire vehicles, or deal in scrap metal.
This will be a small addition to the requirements already put in place by licensing authorities, for example checks to ensure that licensees are fit and proper persons. HMRC say it will be a straightforward online process, taking a few minutes, typically once every 3 years. The tax check will simply confirm that applicants are registered for tax if they need to be.
It will be introduced for licensees in England and Wales from April 2022. HMRC say they consulted widely about their plans in 2016 and 2017.
Decisions on renewals and applications for these licences will be conditional on the tax check, in addition to the licensing body’s requirements.
Support for licence applicants and renewals
HMRC will ensure the process for carrying out the new tax check works for everyone who needs to use it, and that customers will have access to extra support and guidance where necessary. This includes anyone who is unable to use the online service.
Over the coming months HMRC plan to conduct extensive user testing of the online system, and are working with licensing bodies, licence holders and representative bodies to make sure their communications to customers hit the mark.
It’s interesting that HMRC’s announcement outlines plans to conduct extensive user testing of the online system, and also testing HMRC’s communications ahead of the change. This makes us wonder if lessons have been learned from the Check Employment Status for Tax (CEST) tool which was flawed from the outset, and also from their off-payroll legislation communications which were also sub-standard.
According to HMRC, this change towards tax conditionality is one part of a wider strategy to tackle the hidden economy. They are 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.