TAX CHECKS - SCOTLAND / NI
NEW TAX CHECKS FOR LICENCE RENEWALS IN SCOTLAND AND NORTHERN IRELAND FROM MONDAY 2nd OCTOBER WHO IS LIKELY TO BE AFFECTED
is known as ‘tax conditionality’.
In Scotland: individuals, partnerships (including limited liability partnerships) and companies applying for licences to either drive taxis or private hire cars (PHCs), operate a booking office or deal in scrap metal.
In Northern Ireland: individuals applying for licences to drive taxis.
The measure also affects licensing bodies in Scotland and Northern Ireland that administer those licence applications.
An applicant who wishes to renew a licence will need to carry out a tax check. The licensing body (a local authority in Scotland or the DVA in Northern Ireland) will have to obtain confirmation from HMRC that the applicant has completed the check before being able to consider their renewed licence application.
This will be a small addition to the requirements already put in place by licensing authorities, for example checks to ensure that licensees are fit and proper persons. 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.
The process will be slightly different depending on whether someone is renewing their licence or applying for the first time.
If they are renewing their licence, they’ll need a tax check reference number which they can get by submitting their details into the HMRC online service. The licensing authority will use this to confirm with HMRC that the applicant has completed a tax check. The licensing authority will then reach a decision on the licence in the usual way.
The HMRC website contains guidance on the renewal process for applicants (
https://shorturl.at/esDV2) and also guidance on the renewal process for licensing authorities (
https://shorturl.at/huSX2).
First-time applicants will not have to complete the check. Instead, licensing authorities will make sure they have access to HMRC guidance, showing them what they need to do in order to be properly registered for tax in the future. As decisions on applications for these licences are conditional on the tax check (in addition to the licensing authorities requirements) this
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The HMRC website contains guidance for first-time applicants (
https://shorturl.at/ivyAE), and also guidance
for licensing authorities on first-time applicants (
https://shorturl.at/foxRY).
The legislation will also make necessary consequential changes to section 3 of the Civic Government (Scotland) Act 1982 (CGSA) and paragraph 7 and 8 of Schedule 1 to CGSA. These changes will clarify how tax conditionality and licensing legislation interact.
Applications for licences in Scotland must be considered and a decision made on the application within a fixed period, otherwise the licence will be deemed to be granted to the applicant. Amendments to section 3 of the CGSA will clarify that this period begins once the licensing body has fulfilled its tax conditionality obligations, if applicable, for that licence application. This will prevent an applicant being able to have their licence deemed to be granted without completing the tax check.
In addition, when an applicant applies to renew their licence, their existing licence is extended until that application has been dealt with. If the licensing body is prevented from considering a renewal application by the requirements of tax conditionality (in cases where an applicant does not provide confirmation of completion of a tax check) amendments to paragraph 7 and 8 of Schedule 1 to CGSA will cause the existing licence to expire.
This will happen on either its normal expiry date, or, 28 days after the licensing body makes a request for further information from the applicant to enable it to fulfil its tax conditionality obligations, whichever is later. If the licence being renewed is a temporary licence, this time period is reduced to seven days. This will prevent a licence being extended indefinitely as a result of the applicant failing to provide confirmation of the tax check.
Similar consequential amendments were made when the legislation was introduced in England and Wales. These amendments will ensure the tax conditionality rules are applied consistently for licensing bodies across the UK where licences are used to drive a taxi, PHV/PHC, operate a booking office for a PHV/PHC business or deal in scrap metal.
SEPTEMBER 2023 PHTM
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