ALL THINGS LICENSING


transport legislation. Start- ing with VAT legislation, the position in the document sets out that if laws were changed to allow operators to revert back to the agency model, this is likely to reduce tax received by


would be required to change their model and begin to charge VAT would feel an impact which is substantially more.


There is a clear worry about the impact on the sector and concern about a potential reduction in demand due to increased costs, which the expectation is said to be around 1.25% to 2.5% across the whole sector as an average. Again, this is likely to disproportionately affect those who have not moved to the principle model yet.


The VAT impact could be mitigated by drivers and operators using the VAT flat rate scheme where VAT could be claimed back and again views are sought from the trade and consumers on the potential impacts of the judgement.


The next chapter of the document begins to look at government intervention, with the consultation asking whether options against the following objectives are correct:


• Supports vulnerable consumers who rely on PHV services, and maintains high standards of passenger safety/consumer protections


• Cost effective and ensures good value for taxpayers’ money


• Promotes fair competition in the PHV sector • Low non-compliance risk • Easy to administer for both taxpayers and HMRC


Potential Legislative Changes?


Moving on, the consultation comes to the chapter concerning potential legislative change which is bound to be of interest to many, including local authorities, which for some obscure reason are not included in the scope of the consultation.


The chapter on potential legislative change sets out that the Government could amend either VAT or


PHTM JUNE 2024


£750 million per year. Clearly this is unlikely to be favoured by HMRC.


The chapter then discusses potential transport legislative changes and advises that the government has committed to


introducing


legislation to improve the regulation of the PHV and taxi sector in England when Parliamentary time allows (my emphasis added) and will clearly now be left until after the election. As an aside, this returns us to the familiar problem of the lack of priority given to the sector affecting the trade, licensing authorities and customers by outdated laws which I very much hope is dealt with by the next Government.


The consultation continues by examining whether as part of legislative reform, amendments could be made to PHV legislation so that the contract is between the driver and the passenger, rather than the operator and the passenger by


“simply”


removing the reference to the term “contract” in the Local Government (Miscellaneous Provisions) Act 1976. This would require subsequent amendments to other parts of the Act that are focused on the position in respect of contracts and subsequent VAT implications.


However, the London legislation does not include a requirement on a contract being with the operator, and as the previous judgement in this respect has been established, operators in London would continue to be required to be principal in a contract, potentially leading to unfair competition within the sector compared to operators in the provinces.


We know that as it currently stands an operator is fundamental to the booking of a PHV and the paper discussed that maintaining the requirement for a PHV service to be booked through a licensed operator may not enable sufficient change from the current position that the contract is between the operator and the passenger.


7


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