Tax conditionality

HMRC has published a paper setting out its strategy for tackling the hidden economy by making licence renewals conditional on tax checks. As set out in Finance Act 2021 Sch 33, from April 2022 HMRC will introduce a simple tax check when people renew their licences in England and Wales to drive taxis, drive and operate private hire vehicles, or deal in scrap metal. HMRC says that this will be a straightforward online process, taking a few minutes, typically once every three years. The tax check will simply confirm that applicants are registered for tax if they need to be.

For licence renewals, individuals will need a tax check reference number, obtained via an HMRC online service. The licensing body will use this to confirm with HMRC that the applicant has completed a tax check. The licensing body will then reach a decision on the licence in the usual way.

First-time applicants will not have to complete the check. Instead, licensing authorities will make sure applicants have access to HMRC guidance, setting out what they need to do in order to be properly registered for tax in the future.