Taxi Driver Online

This article seems to properly address the taxi/private hire divide, but unfortunately it's spoilt by the headline. But remember that sub-editors write the headline, not the authors of the article, which may explain the discrepancy

But that's just the terminology thing - the reason for the substantive divide between HCDs/PHDs and tax compliance isn't really explained in the article


HMRC chases 4,000 taxi drivers for unpaid tax

https://www.ft.com/content/f8bca852-991 ... 29d807828e

Suspicions over private hire operators who use mobile apps

HM Revenue & Customs is chasing thousands of private hire drivers for unpaid tax as new registration requirements expose the scale of undeclared income among drivers who operate via online apps.

HMRC announced this week it will write to about 4,000 drivers who are booked via apps such as Uber, Ola and Bolt, whom it suspects may not have declared all of their income.

Since April, the government has made additional tax checks on the licence renewal applications of private hire drivers, a process that all taxi and private hire drivers go through every three years.

Steve McNamara, general secretary at the Licensed Taxi Drivers Association, said that private hire drivers who had previously failed to pay their taxes are now being found out as they attempt to renew their licences without an HMRC code.

He said “many” private hire drivers, most of whom operate via the ride-sharing app Uber, have not been paying the right amount of tax and he expects there to be “tens of thousands more” over the next two and a half years as licences are renewed.

“The Revenue has been missing out on tens of thousands [of pounds] of income for years,” he added.

HMRC said the missing taxes were among private hire drivers who operate on booking apps — not “black cab” taxi drivers, who have separate licensing requirements.

McNamara added that there are about 22,000 black cab drivers and more than 100,000 private hire drivers in London.

Uber told the FT its drivers were self-employed for tax purposes, so it could not check what drivers put in their tax returns. It said it worked with HMRC to make sure the authority had all the information it needed.

HMRC will send letters from September 5 until the end of the year to drivers it suspects have underpaid tax and recipients will have 30 days to respond or face a possible review of their tax affairs.

For those who agree to make a voluntary disclosure, the authority will send an acknowledgment letter offering drivers 90 days to work out and pay the tax owed.

The requirement for private hire drivers to include their HMRC code in the licence renewal process came following the recommendation of a report in 2018. McNamara suspects that most of the drivers being chased by HMRC for unpaid taxes will come from London and other big cities in the UK, where private hire cars operating on apps are most popular.

Some apps such as Uber, Ola and Bolt are exclusively for private hire cars. Other apps, such as Free Now, enable users to pick between a taxi and hire car.

In February 2021, the Supreme Court issued a landmark judgment which confirmed that Uber drivers are workers and not independent contractors. This means that Uber drivers are entitled to pension contributions and holiday pay — but they can still choose when they work and are still self-employed for tax purposes.

HMRC confirmed in a statement that the letters were “being sent to people who have earned money from driving customers who booked private hire cars through online driving applications”.

Not clear why there should be such a strict divide between the HC and PH trades here with regards to tax compliance, and I certainly doubt there is outside London. And why would Uber, Ola and Bolt drivers be any worse than traditional London minicab offices?

But maybe the crucial factor here (but it's not declared above, if you'll pardon the pun), is that it's about automation and audit trails etc. It's easy for HMRC to get driver details and records from Uber et al, and they can then cross-check this with tax returns, and of course the tax code thing will also help pinpoint errant drivers.

Which in turn maybe helps rationalise why many in the trade are doing their damnedest to avoid card transactions, because of the audit/compliance trail that it leaves

I think a lot of this is down to the gig economy which many see as a way of working and avoiding tax not just this trade but any trade where getting paid cash is the norm.

Cabbies by their nature are more of a long term career choice hence most likely to be registered for and paying tax

the likes of uber and bolt effectively are pitched at people who want to earn a bit of cash on the side

every trade gets a blitz by HMRC one local plumber got collared for over 100k in unpaid tax a few years ago when they were hitting the plumbing and electrician trades now it's our turn

Although as a rule drivers are not particularly well paid but, I would not be surprised if our trade probably under contributes to the national coffers by as much as a billion pounds

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lack of modern legislation is the iceberg sinking the titanic of the transport sector

Well I agree to a certain extent, but looking at the HC/PH divide in that way is a crude binary, and there's elements of all of all that on both sides, although maybe more so on the PH side.

I mean, plenty of career minded PHDs around, while plenty HCDs working part-time/occasionally in the gig economy/on the side.

Same with all this 'gig economy' stuff - I mean, the 'experts' bang on about it as if it's something totally new. But, while Uber and the like may have encouraged the gig economy, it's really just a new term for something that was pretty obvious when I started in the trade as a part-timer in the 1990s

But I suspect that, as regards the tax compliance stuff, it's because all the app stuff is recorded and banked, thus a lot easier for HMRC to find errant drivers.

So it's more about an audit/compliance trail rather than the particular code the driver is working under.

If anything it should be the reverse, as they don't take cash and every penny they take has an easy accessed (by HMRC) audit trail.

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IDFIMH

It's not just those that are working the private hire apps, it's also those that have been working from an office and Hackney renters that will be caught out at licence renewal one way or another, stay and register as self employed, HMRC will want to know what they have been doing for the last 5-10 years as employment, easily to find out by asking the LA how long they have held a badge, leave the trade and take a PAYE job and HMRC will want to know what they have been doing for the last 5-10 years to be able to afford to pay the mortgage or rent, when they are "not working or claiming" either way they are caught, I know of at least 3 in my area that will not be renewing their licence when it's up for renewal this year because of the need for a tax code.
It also seems that the other part of the gig economy (food delivery) are also asking their drivers to produce a HMRC tax code to prove they are self employed to get into that line of work now according to a friend who is leaving the trade to do food delivery because of the tax code requirement.

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now a licensed hackney driver

As a former PH driver in a rural area, I reckon most rural drivers would benefit from being properly registered for tax. If they do their costings right, they'd be owed a lot from HMRC fro the losses they make. One instance, going back about 10years, the one regular HC driver in the town was always out and about working. Day and night, typical grafter. He was moaning about being clobbered for tax, he didn't keep all his bills, HMRC used the average income from the HC drivers in the nearest big town, Folkestone.

I still had the spreadsheets from when I used to do bus tendering for TfL contracts in my previous business. I asked HCD how many miles a year he did, his HP/car rental, his mpg. Average speed of his car, how often he changed tyres. All this put into the spreadsheet pointed to the fact that if he worked less, he would actually not have to pay tax at all. Divide annual mileage by average speed to get hours driven. Miles by fuel bought, insurance, repairs, road tax, licencing, annual tests all deducted, phone bills, the lot. Ye was basically doing so much work just to pay the tax bill that he could have avoided by working less! Typical run to ashford, 17 miles each way, Ashford out of area, so 17 mies dead on each trip costing the punter £20 for the driver doing 34 miles plus the dead bit to collect punter. and an hour's driving. HMRC's own figures allow 45p per mile. So the trip costs the drive about £29, not allowing for his time, so he's worked for nothing and made a loss on it. But at the end of the day he's had 4 Ashfords and earnt £80 in cash. And earnt nothing.

there are some who believe that by doing school contracts their earnings won't ever be traced

there are many others who keep 2 sets of books one for the tax man and one secret one believing as long as something is declared the tax man won't take a closer look and others that think they can have a regular PAYE job and two extra jobs that they can pocket the money from.

All of those scenarios exist around here including App drivers who drive on an app during week and off a rank taking cash at weekends

The taxman might catch a few but I suspect unless an army of tax inspectors "raid" the trade only the tip of the iceberg will be caught

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lack of modern legislation is the iceberg sinking the titanic of the transport sector

Cant see how PH's can expect to cheat the HMRC.....the Vehicles Miles at the start of the tax year deducted from the vehicle mileages at the end of the Tax year show precisely the miles travelled and the fuel use also reflects it....and your declared fare income matches the mileage with the exception of a small percent of non fare mileage.

I think a few chickens came home to roost when the Seiss grants where being calculated!

The percentage of dead miles around here is close to 50%

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Grandad,

I think he meant to say personal mileage ?

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lack of modern legislation is the iceberg sinking the titanic of the transport sector