HMRC: BIG CHANGES ARE COMING YOUR WAY
In the Chancellors March 2020 Budget, the Government announced that from the first Monday of the financial year, 4th April 2022, when a person applies for a licence in England and Wales to drive a taxi or pri- vate hire vehicle or operate a private hire vehicle business, they will be required to comply with the new HMRC conditionality requirements before the licensing body is able to consider the application.
In a Zoom meeting with HMRC on 11th August, where the NPHTA was the only trade representative body invited, and Dave Lawrie of the NPHTA was central to the dis- cussions held on upcoming legislation being implemented to ensure that everyone was correctly registered for income tax, some important points were made.
The main focus was on hackney and private hire drivers, and private hire operators. We pointed out that there is a very large sector who merely hire out the vehicles but never actually drive them, so the new rules should also include vehicle licences.
WHAT DOES THIS ACTUALLY MEAN?
Quite simply, it will add a new step on to the existing licensing application bundle. Your local authority licensing unit will be expect- ed to signpost you to where and how to apply for self-employed status, or to verify that you already have done, at which point you will be given a unique identifier code to submit in order for your application to pro- ceed, in much the same way as the current DBS and update service system with which we are all familiar.
HOW THIS WILL AFFECT THE TRADE
HMRC will deliver the tax registration check to councils through a digital interface, so unless you have registered for self- employed status, or verified that you don’t need to, you may find that you are refused a licence.
It is extremely important here to clarify that this is NOT going to show licensing authori- ties any actual income details; it will ONLY show them that you are registered and com- pliant with HMRC. It will simply be an online portal in much the same way as the DBS update service, which will show “compliant” or “not registered”; it is simply a way for the local authority to give details to applicants on where and how to register.
MINIMISING BURDENS FOR APPLICANTS
The intention is to • Merely a simplified approach, and source of guidance and advice
• Getting a licence for the first time infor- 26
mation given about tax obligations, record kept that the applicant has con- firmed they are aware of these
• Applicant thinks about tax obligations before proceeding and has access to HMRC guidance and contact details
THE PROCEDURE FOR RENEWALS
• Applicant logs into digital service Answers questions about their tax regis- tration status (including declaring if they don’t have a tax liability)
• System checks HMRC records • Employees simply declare that they have PAYE income
• Details required are simply NI number, date of birth or UTR number
At this point, it was made clear that for those just entering the trade, there would be no need to register until the licence was actually granted, since if the licence is not granted for other reasons then they may not become self-employed at all, which is why it is signposted only for new applications.
• Renewal applicants must request and receive confirmation that the tax check has been completed.
• The tax check must have been completed no more than 120 days before the licens- ing body requests the confirmation.
• The 120 days was questioned, since for most other aspects of licensing it was one month maximum. But for this purpose (in much the same way as a DBS) once applied, provided it was kept up to date, the registration would be valid for the entire financial year. This was clarified by way of example: if someone registered for tax in April, but renewed their licence in October, the registration would actually still be valid, but would not be accepted by licensing, rendering it counterproduc- tive to have a time limit on it. HMRC agreed to have another look at that.
HOW DO WE APPLY?
These are some examples of the sort of information the applicant will be asked to provide:
• Name and date of birth • Identifying information such as a Unique
Taxpayer Reference (UTR), National Insurance number, or their company’s registered number
• Crucial to clarify again here: these relate only to HMRC compliance, NOT details for submission to licensing authorities. Com- pliance confirmation is the only part that here that relates to licensing; the details of actual submission are for HMRC eyes only
The check is completed when HMRC is satisfied that the applicant has complied.
WHAT IF I CAN’T ACCESS THE HMRC PLATFORM?
The legislation contains safeguards to allow councils to consider applications for licences without first obtaining confirmation the applicant has completed the tax check.
• The first scenario is where the applicant is unable to complete the tax check because the HMRC portal is unavailable.
• The second scenario is where the licens- ing body is unable to request confirmation from HMRC for five days due to the HMRC portal being unavailable.
• Both of these allow for situations where HMRC platform is unavailable, meaning the driver or indeed the authority, have done all they need to do and can there- fore proceed as normal.
HMRC OBLIGATIONS
The legislation sets out what HMRC is required to do to comply.
• HMRC must respond within three days to requests for confirmation that an appli- cant has completed a tax check.
• HMRC must either provide the confirma- tion or state why it is not being given.
• Should HMRC fail to respond to provide confirmation within three days, the licens- ing body can consider the application.
WHAT DATA WILL THE COUNCILS SEE?
• Under Data Protection and Commission- ers for Revenue and Customs regulations, there are strict rules on information use and disclosure.
• To operate, HMRC must only disclose a minimal amount of information.
• HMRC will only be able to disclose infor- mation for the purpose of operating.
• Licensing bodies will only be provided with limited information.
• This was clarified in some detail; the sim- plified version is that LA’s will have a unique identifier, just like the DBS update reference number; when checking it online they will only see “registered” or “not reg- istered”. There will be no confidential details released to comply with GDPR.
SEPTEMBER 2020
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