New taxi and private hire industry TAX CHECKS could earn government extra £65MILLION in revenue
Updated: Dec 31, 2020
New tax checks for all taxi and private hire drivers could earn the Government an extra £65million each year in revenue according to a new report.
The Government have published its latest policy paper which details plans to bring in conditional tax registration (tax check) for all renewed taxi and private hire (PH) applications in England and Wales.
Individuals and companies applying for licences to either drive a taxi or PH, or to operate a PH business, will be subject to the tax check from April 2022. The measure also affects licensing bodies in England and Wales that administer those licence applications.
The Government suggests the ‘hidden economy’, which consists of individuals and businesses with sources of taxable income that are entirely hidden from HMRC, could be worth an extra £65milion each year in the taxi and PH industry alone by 2026.
The hidden economy tax gap, the difference between the amount of tax that should in theory be collected by HMRC, and what is actually collected, is estimated to be a huge £2.6 billion for 2018 to 2019 across all industries.
The new proposal will mean an added step for all new applicants to the trade, plus those already working and licensed. Drivers will be asked to complete the new application process with their local authority verifying their unique HMRC code.
Licensing bodies will then be required to signpost first- time applicants to HMRC guidance about their potential tax obligations and obtain confirmation that the applicant is aware of the guidance before considering the application.
Where the application is not a first-time application, a renewed application, the licensing body must, before considering the application, obtain confirmation from HMRC that the applicant has completed a tax check.
