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15 June 2022 | Comment | Article by Justin Davies

3 developments in taxi licensing you need to know about

Senior Associate, Justin Davies, looks into 3 key recent developments in taxi licensing.

There have been several recent developments in this field, which is perhaps unsurprising given that the main legislation that applies to most taxi licensing dates from 1847 and 1976. We provide an overview of three issues that are likely to be on licensing practitioners’ – and local authorities’ – radars. Some relate to Wales only, others have implications across England and Wales (but outside London, where a different regime applies).

Harmonisation of Taxi and Private Hire Vehicle Licensing in Wales

On 22 March 2021, the Welsh Government published Taxi and Private Hire Vehicle licensing guidance for local authorities. That guidance, entitled ‘Guide to Harmonisation of Taxi and Private Hire Vehicle Licensing in Wales’, was produced jointly between the Welsh Government, the Welsh Local Government Association (WLGA) and representatives of local authorities across Wales (via Public Protection Board Wales). Taxi and Private Hire Vehicle regulation is a devolved matter under the Wales Act 2017.

This guidance was produced in recognition that, as referred to above, Taxi and Private Hire Vehicle licensing legislation is outdated, and resulted in inconsistent policies, standards, and licence conditions across local authorities in England and Wales. This had a concomitant effect on safety for both drivers and passengers, licensing standards across local authorities hire, customer service, and public confusion around vehicle types and fare structures.

The Welsh Government administration at the time explicitly acknowledged that new legislation was needed to address these issues, but the Guide was intended to build solutions to some of these problems and provide a number of ‘quick fixes’. In particular, the Guidance sought to improve public safety, provide more consistent licensing standards across Wales, facilitate effective enforcement, improve customer service, and improve customer accessibility.

Looking to the future, the Welsh Government indicated that work had begun on developing Taxi and Private Hire Vehicle licensing legislative proposals, focused around four key areas:

  1. safety
  2. equality
  3. environmental standards
  4. customer experience.

Welsh Government also announced that it would create national licensing standards for drivers, vehicles and operators, with an emphasis on maximising public safety and professionalising the industry. The Guide is described as a “stepping stone” towards national licensing standards and professionalisation of the industry.

Tax Checks for Taxi & Private Hire Licences

From 4 April 2022, if an application is made for a Taxi licence, Private Hire Driver’s licence, or a Private Hire Vehicle operator’s licence, then applicants will need to complete a tax check. This applies regardless of whether the applicant is an individual, company, or any type of partnership, and will be required where an application is being made to:

  • renew a licence
  • apply for the same type of licence that was previously held, but which ceased to be valid less than 12 months before the application
  • apply for the same type of licence that is already held with another licensing authority.

If an applicant has never held a licence of the same type before, or had a licence of the same type that ceased to be valid a year or more before the application is made, then it will not be necessary to complete a tax check, but applicants should follow the Confirm Your Tax Responsibilities Guidance document.

A tax check confirms that an applicant is registered for tax, if necessary. Questions are asked about how applicants will pay tax that may be due on income that is earned from their licensed trade. The obligation to carry out the tax check rests on the applicant – they cannot ask a tax agent or adviser to do this on their behalf. Once the tax check is undertaken, applicants will be given a 9-character code that must be provided to the licensing authority when the application is made. Licensing authorities will not be able to process the application without it.

To carry out a tax check, applicants will need a Government Gateway user ID and password (which can be created when the tax check is started).

Ongoing case of Uber Britannia Limited -v- Sefton Metropolitan Borough Council [2022]

This ongoing case could – if resolved in Uber’s favour – lead to change in VAT treatment on private hire journeys, resulting in a consequential additional charge made to passengers. Presently – and since the 1970s – VAT is not charged on individual Private Hire vehicle journeys outside of London because the licensed driver is regarded as the “Principal” for tax purposes, and the Private Hire operator acts as Agent, connecting the passenger with the licensed driver. Generally, individual Private Hire and Taxi (Hackney Carriage) drivers are not VAT registered because their earnings fall below the threshold requiring registration with HM Revenue and Customs. This means that VAT is not payable by passengers.

However, in 2021, in another Uber case, the High Court determined that, in London (where a separate licensing regime applied under the Private Hire Vehicles (London) Act 1998), private hire operators were required to contract with passengers as Principal rather than Agent. This meant that Uber was required to amend its business model on how it provided its services. From 14 March 2022, Uber began to charge the applicable VAT rate in London.

Now, Uber Britannia Limited, which is licensed by Sefton MBC as a private hire vehicle operator in its area (under the provisions of Part II of the Local Government (Miscellaneous Provisions) Act 1976), has commenced proceedings against Council seeking a declaration from the High Court as follows:

“In order to operate lawfully under Part II of the Local Government (Miscellaneous Provisions) Act 1976, a licensed operator who accepts a booking from a passenger is required to enter as Principal into a contractual obligation with the passenger to provide the journey which is the subject of the booking”.

This means that Uber is seeking clarification from the Court of the law that applies to the rest of England and Wales. The court will be asked to determine whether the position in the rest of England and Wales (where the provisions of Part II of the Local Government (Miscellaneous Provisions) Act 1976 apply) should mirror London.

This has potentially significant consequences, with many operators concerned about the effect of such an uplift on deprived regions and communities across England and Wales. With a well-documented cost of living crisis, there is concern that users of Private Hire vehicles will be unable to afford the additional uplift that would need to be applied. There is also concern that many Private Hire operators across England and Wales are small, family-run businesses who would be faced with an additional burden. It would also remain to be seen whether the imposition of an additional burden on private hire operators would see an increase in unregulated journeys.

Court proceedings are presently ongoing, with it envisaged that there will be hearing of Uber’s application at the High Court on a date to be fixed in July 2022.

How can we help?

If you’re applying for a licence, have applied and been refused, or if you are an existing licence holder facing revocation or suspension of your licence, we can assist. Get in touch with our dedicated Licensing team, using the button below.

Author bio

Justin Davies

Legal Director

Justin Davies has specialised in criminal and regulatory law since qualification in 2007. He has particular experience of regulatory criminal proceedings instituted by Local Authorities and other non-police agencies, and spent time as a specialist regulatory prosecutor at Merthyr Tydfil County Borough Council, advising and prosecuting on behalf of its trading standards, public/environmental health and counter-fraud departments. Justin now practises in regulatory, corporate crime and allied areas, acting for both prosecution and defence. Justin holds (and regularly exercises) Higher Rights of Audience in Criminal Proceedings, which allows him to represent clients before the higher criminal courts.

Disclaimer: The information on the Hugh James website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. If you would like to ensure the commentary reflects current legislation, case law or best practice, please contact the blog author.


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