HMRC to get tough on taxi firms and scrap metal dealers

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HMRC is set to get tough on taxi businesses and their drivers together with scrap metal dealers from April 2022, requiring rigorous ‘tax checks’ before any licence to operate is renewed.

It may see businesses unable to renew their licence to operate and forced to close.

The changes, which take effect from 4 April 2022, will affect taxi and private car hire business and their drivers, and scrap metal dealers in England and Wales. These changes are being introduced as HMRC believes up to 400,000 businesses and their staff are not fully declaring and paying taxes. The measures will, the Government believes, result in £155m in additional review between 2022/23 and 2025/26

A consultation to introduce similar measures in Scotland and Northern Ireland closed on 21 July 2021.

Our expert Ruth Corkin said: “HMRC is getting tough on taxi, private hire and scrap metal businesses and the staff they employ. These businesses will need to obtain a tax code from HMRC and submit that to their licencing body alongside their licence renewal. Licencing bodies will only be able to issue operating licences once confirmation from HMRC has been obtained. Staff who are not registered for PAYE or Self Assessment will not be able to legally work.”

HMRC is encouraging taxi, private care hire and scrap metal businesses to obtain their code via a business’s Government Gateway account, supported by its telephone helpline. Employees and self-employed drivers or scrap metal collectors will also need to register for PAYE or Self Assessment to continue to work.

It is also likely that HMRC will seek to introduce this measure to other sectors where it feels the revenue is at risk due to the Hidden Economy, and other sectors of the economy in the future.

Ruth adds: “We would urge businesses and their staff to get tax affairs in order, including obtaining a tax code, well in advance of the April deadline. If left to the last moment, delays at HMRC may well see a business having to stop trading and individuals unable to work.”

More information on these tax changes can be found at https://www.gov.uk/government/publications/licence-application-tax-check-communications-resources/tax-check-factsheet.

Tax is a complex area. If you have been affected by any of the topics mentioned please get in contact with one of our friendly experts who will be happy to assist you. You can contact us on +44(0)330 024 3200 or hi@hhllp.co.uk

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Ruth Corkin

Ruth has been involved with VAT for over 30 years. She started her VAT career as a Customs and Excise Officer in Essex and then moved into consultancy with a variety of well-known accountancy firms. She is well known in the VAT world and is the proud author of many articles and technical works.

Contact Ruth at ruth.corkin@hhllp.co.uk or on 01908 713 860