CONCERNS: Taxi industry ‘NOT AWARE’ of forthcoming conditionality tax checks say local authorities

A new study from untied, a personal accountancy tax app firm, today revealed a widespread concern amongst local authorities around the implementation and management of the conditionality taxi and Private Hire Vehicle (PHV) tax checks that are due to be introduced in April 2022.

Over eight in ten say they believe that taxi and PHV operators, as well as drivers, should be preparing in advance of the forthcoming changes, but almost two thirds (73%) say that they are not confident that all operators in their area are aware of these checks.

Due to come into force in April 2022, conditionality is a significant new legislation that will require all self-employed taxi and PHV drivers to pass a ‘tax check’ to renew their operational licence. If this isn’t done, the licensing body will be unable to consider the licence application and the applicant will no longer be licenced to operate.

According to untied, one of the local authorities said: “I am concerned that we may lose more drivers from the trade which will compound the significant reduction in licensed drivers who are actively working in the trade at the moment. Many licence holders have found other employment during the pandemic and have not returned to the trade.”

All of the authorities surveyed by untied are aware of the introduction of conditionality and are actively preparing in one form or another. Almost a quarter (22%) are now saying that they felt ‘very prepared’ for this change. This figure is still relatively low but much higher than when they were first surveyed in July (9%). Over half (52%) still remain only ‘somewhat prepared’ (compared to less than 20% in July).

Nonetheless, local authorities are generally feeling less informed about specific areas such as:

• The changes in general and their obligations as a local authority (35% compared with 23% in July)

• Their responsibility to confirm that applicants understand their tax obligations (41% compared with 24% in July)

• The implications of a failed check preventing the renewal of a licence (45% compared with 23% in July).

Kevin Sefton, CEO of untied, said: “With just three months to go until the introduction of conditionality, the clock is quickly ticking down on the time left to prepare for these changes from April 2022. Let’s be in no doubt these are significant changes. It’s a huge undertaking that’s costing HMRC at least £9 million. Around 400,000 businesses will be impacted in the first 12 months. Local authorities in England and Wales will have a significant new role recording the outcome of these tax checks on their systems. HMRC estimates it will cost local licensing authorities at least £1.5 million to change their systems and processes to cope with these rules.

“HMRC is already planning for things not going smoothly by introducing special guidelines for what to do if an HMRC failure causes a problem. Other stakeholders need to ensure they have plans in place to help mitigate any problems and untied can help with this - using technology to make the process as streamlined as possible. We have written to HMRC to outline potential issues and we are speaking to local authorities and taxi operators about developing bespoke solutions to limit risk.

“We know these checks are coming at a tough time for taxi drivers and the industry, but with advance planning and support we hope that local authorities and the industry can quickly integrate these checks into business as usual.”