FROM EAZITAX CHALLENGES FOR OPERATORS AND DRIVERS IN 2022
CONDITIONALITY AND THE HIDDEN ECONOMY
Let’s start at the beginning HMRC decides to enforce tax checks on renewed private hire licences. The consultation said: The principle of conditionality involves making access to licences or services needed to trade, conditional upon tax registration. Conditionality could reduce activity in the hidden economy in this sector THAT MEANS US!
What exactly Is happening?
From April 2022, in order to be transport passengers, drivers will now have to prove that they are willing and ready to pay tax. It’s called Conditionality. It is a ‘condition’ of being licensed and will be an overnight change to the taxi and private hire industry. If they aren’t registered for tax, they won’t be allowed to relicense.
It is HMRC’s new campaign to move people out of the untaxed hidden economy and ‘into the light’ of compliance. ‘The Revenue’ estimates that the UK has lost £2.6 billion of tax revenue. They are hungry to make up some of the loss from our trade. Simple as that.
If your drivers are renewing their licences, they’ll need a tax check reference number. They can get this by submitting their details to HMRC. Your licensing body will use this to confirm that the applicant has completed their tax check which allows them to issue a licence if the recipient is tax registered.
The truth the whole truth….
HMRC has issued draft questions that will probably be part of the conditionality process.
Once again, we must stress that this is a prototype cut from their first draft.
Here’s what we have so far:
So if your answer to these include the statements :
• “I first got my licence ten years ago”.
• “I had no tax status for the work I carried out”. Or
• “I did not include income earned using this type of licence in my tax return”.
JANUARY 2022 PROTOTYPE
HMRC will be wondering why anyone would get a licence and then not use it! There are of course drivers where this is genuinely the case, but for many drivers, they would leave the trade rather than face what comes next.
What Will Happen to Drivers?
This is the bit that industry specialist accountants like me are good at, however just so that you know, this is the process that a tax unregistered driver goes through:
Compliance Check – Failure to notify Compliance Check – Non-Filing penalties
These are what we would call enquiries and must be taken seriously. Sounds bad, no? But don’t panic. Even HMRC’s own guidelines say: “You can also ask someone else to deal with us on your behalf, for example, a professional adviser.” This is not the right place to share the strategies that accountants use in these sorts of enquiries. There is a simple rule that any driver can follow to make sure the process has minimal impact.
HMRC is much nicer to deal with if you introduce yourself to them than if they come looking for you. So, with the right approach and a little forward planning, we can make every- thing OK. I can’t tell you the number of times a driver leaves our office after going into this process by saying; “it’s like a weight of my shoulders.” It’s all about the appropriate measures for the appropriate problems.
How can operators help their drivers?
The answer is clear: Build simple tax training into your onboarding. Communicate to all your drivers about their tax status. Some will be resistant but choose the right people to communicate the message. Be a helping hand and a listening ear. Their problems are mostly based in tax fear. (Which isn’t a thing)
• To learn more about Conditionality and receive a free information pack, visit:
https://www.eazitax.co.uk/conditionality
• If you are a driver and would like to join Eazitax visit:
https://www.eazitax.co.uk/drivers
• Enclosed is our free tax jargon buster, whether you’re old or new to driving, tax registered or unregistered, there is vital information to help every driver.
• If you’d like to order more booklets, please contact our office on:
020 8529 2600 or email:
info@eazitax.co.uk 41
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