• Less than a quarter (23%) of local authorities were “well aware” of the changes and less than one in ten (9%) “totally prepared”
  • Almost three in five local authorities are concerned about HMRC readiness around the forthcoming tax licensing changes
  • Key concerns include disruption for those being licensed (59%), managing those who end up being rejected (68%), the implications of refusing applications (59%)

New research from untied, the personal tax app, reveals a worrying level of unpreparedness amongst local authorities about the forthcoming ‘conditionality’ tax check linked to licence applications.

Less than a quarter (23%) of local authorities were “well aware” of the changes and less than one in ten (9%) “totally prepared” for them. Significantly less than three quarters (68%) were moderately prepared.

Due to come into force in April 2022, conditionality is a significant new legislation that will, over time, affect taxi drivers, private hire vehicle drivers and businesses in England and Wales operating in these sectors, as well as people who deal in scrap metal.

Licence renewals for individuals operating in these sectors will be conditional on the applicant completing tax checks to confirm they are appropriately registered for tax. If this isn’t done the licensing body will be unable to consider the licence application and the applicant will no longer be licenced to operate. 

untied’s survey was designed to investigate what local authorities thought about the forthcoming licence changes. Other findings included: 

Nearly a quarter of local authorities felt uninformed about specific areas such as:

      • The changes in general and their obligations as a local authority (23%)
      • Their responsibility to confirm that applicants understand their tax obligations (24%)
      • The implications of a failed check preventing the renewal of a licence (23%)
The most significant areas of concern for local authorities were:
      • HMRC readiness (57%)
      • The disruption for those being licensed (59%)
      • Managing those who end up being rejected (68%)
      • The implications of refusing applications (59%)

Kevin Sefton, CEO, untied said: “As well as a new hurdle for individuals and businesses operating in these sectors, these new rules will impact all of the local licensing authorities in England and Wales. HMRC estimates these measures will significantly impact around 400,000 businesses and involve continuing costs for those businesses completing the tax check each time they renew their licence.

“It’s a huge undertaking and it’s hugely troubling that local authorities and HMRC alike are relatively late to the party. There are less than ten months before the new tax checks kick in and if new measures aren’t implemented soon, we could see many taxi and private hire drivers off the road come the new tax year. We are now liaising with the Institute of Licensing to help local authorities understand the implications and what needs to be done before this all starts in earnest.”

Surprisingly, only half (55%) of local authority respondents indicated that they thought a dedicated budget would be required to accommodate these changes. In addition, less than a third (32%) thought new hires and only a quarter (24%) believed new IT systems would be required. This suggests some local authorities are underestimating the impact these changes will have on them. HMRC’s operational impact assessment for the additional costs to licensing bodies from accommodating these changes estimate these to be in the region of £1.5 million. HMRC also estimates the cost to themselves from introducing these new measures are expected to be around £4.5 million for new computer systems and £4.5 million on staff resources.

On a positive note, however 95% of local authorities say they recognise that new processes are needed to deal with conditionality and 91% know that engagement with affected businesses is crucial.

untied is working with PHV and taxi drivers, and others affected by these changes to help ensure their tax is in good order and they are correctly registered for tax, as well as speaking to local authorities about how these changes can be introduced as efficiently as possible. Contact conditionality@untied.io if you want help about this and view https://www.untied.io/conditionality for more information.  


For further information:

Chantal Heckford pr@untied.io