HMRC chases 4,000 taxi drivers over unpaid tax
HMRC has written to more than 4,000 taxi and private hire vehicle drivers to claim back unpaid tax, following recent registration requirements
On 4 April 2022, HMRC introduced tax checks on licensed and private hire vehicles. These checks are required when taxi drivers in England and Wales renew their licences.
The checks confirm whether a driver is registered for tax on their licensed taxi income. Drivers in Scotland and Northern Ireland will also be required to comply with the same licensing checks from April 2023.
HMRC has since uncovered thousands of taxi drivers who remain unregistered, with many currently operating via booking apps such as Uber, Bolt and Ola.
According to Transport for London (TfL) statistics, there are currently over 96,000 private hire vehicle licenses in London and under 19,000 taxi drivers.
The tax authority sent out letters on 5 September to drivers that have underpaid tax or failed to declare income correctly. It will continue to do so over the next 17 weeks. Those receiving the letters will have 30 days to respond or will face a possible review of their tax affairs.
Steve McNamara, general secretary at the Licensed Taxi Drivers Association (LTDA), said: ‘The revenue has been missing out on tens of thousands (of pounds) of income for years.’
According to the Financial Times, the tax authority said the lost tax originated from taxi drivers working on booking apps and that the letters were ‘being sent to people who have earned money from driving customers who booked private hire cars through online driving applications’.
Currently, a taxi and private hire vehicle license is valid for three years, issued by the Public Carriage Office (PCO), which is part of the TfL.
Drivers must confirm they are aware of their tax responsibilities when they apply for a licence for the first time.
They must also carry out the tax check themselves and cannot ask a tax agent or adviser to do it on their behalf.
Upon completing the tax check, drivers will receive a nine-character tax code. It must be given to the licensing authority with the licensing application.
Tax check codes expire after 120 days, and a new tax check is required if another licence application is made.
Drivers can use one tax check code for more than one licence application, as long as all the applications are for the same type of licence.
HMRC worked with sector representatives and licensing bodies to communicate the changes leading up to April 2022 and to support those who might be affected.
Story by Max Austin from Accountancy Daily