More specifically, licences to drive taxis and private hire vehicles, to operate a private hire vehicle business, or deal in scrap metal, will only be given if the person applying can show they have completed a tax check with HMRC.
As decisions on applications for these licences are conditional on the tax check, this is known as ‘tax conditionality’.
When renewing their licences, applicants will need to complete a basic online check to confirm they are registered for tax if they need to be. This will help licence holders get their tax affairs right while making it harder for people to operate in the hidden economy. This will help create a level playing field for businesses in these sectors.
HMRC wants to help customers to understand and prepare for the changes next spring.
The licences which will be subject to this tax check are:
- Taxi driver licences
- Private hire vehicle (PHV) driver licences
- PHV operator licences
- Mobile collector licences for scrap metal dealers
- Site licences for scrap metal dealers
The role for agents
The tax check is not an enquiry or a compliance check into an individual’s affairs. It is a requirement that applicants will need to fulfil to get their licence.
It is designed to make sure that those receiving a licence have complied with basic tax obligations, and it will become another check linked to the licensing process, like those fulfilled by applicants in relation to their driving licence status or right to work.
The new digital service is there to help applicants to complete the tax check. It will help them to pass on confirmation to a licensing body once the check is complete.
Most questions in the tax check relate to an applicant’s current or past licences. It also includes a small number of multiple-choice questions to determine whether applicants have notified charge ability to income tax or corporation tax and whether income from the licensed activity has been reported on a tax return.
Because of the simple nature of the check and its link to licensing processes, the design of the service does not include an option for agents to complete the check on a client’s behalf.
HMRC would expect agents to be involved in wider processes linked to the tax check. For example, this may include agents’ supporting customers who need to register for the appropriate tax.
The revenue is continuing to design the new service and has carried out user research with agents to enable them to see the prototype in development.
It says the idea of the service was well received by the agents who participated in the user research, and the large majority believed that their clients should be able to do the tax check on their own.
HMRC says that it will continue to engage with agents as it develops the tax check service.
If you have any questions about tax conditionality or would like to meet and discuss it with HMRC, email compliancepolicyisbc@hmrc.gov.uk.
Find more information about HMRC’s strategy for tackling the hidden economy here.
