Who is likely to be affected

Individuals, partnerships (including limited liability partnerships (LLPs)) and companies applying for licences in England and Wales to either drive taxis or private hire vehicles (PHVs), or both, operate a PHV business or deal in scrap metal.
The measure also affects licensing bodies in England and Wales that administer those licence applications.

An applicant who wishes to renew a licence will need to carry out a tax check. The licensing body (typically a local authority) will have to obtain confirmation from HMRC that the applicant has completed the check before being able to consider their renewed licence application.

Reasons behind the new policy.

The hidden economy consists of individuals and businesses with sources of taxable income that are entirely hidden from HMRC. This deprives the government of funding for vital public services. The hidden economy tax gap (the difference between the amount of tax that should, in theory, be paid, and what is actually paid is estimated to be £2.6 billion for 2018 to 2019.

The hidden economy also distorts competition and is linked to wider rule breaking and criminality, including money laundering, health and safety violations, failure to comply with employment rights, and immigration offences. HMRC is committed to levelling the playing field for legitimate businesses and has a continuing programme of operational work to tackle the hidden economy.

Many people operating in the hidden economy do so because they are unaware of or confused about their tax obligations. If they have been hiding their income for a long period, they are also likely to find it harder to come forward and tell HMRC that they are, or should have been, chargeable to tax (‘registered’).

Operative Date

This measure will have an effect on applications made from 4 April 2022

The full article on the Government website can be accessed here: https://www.gov.uk/government/publications/new-tax-checks-on-licence-renewal-applications-in-england-and-wales/new-checks-on-license-renewals-for-taxis-and-private-hire-vehicles