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HMRC chases 4,000 taxi drivers for unpaid tax

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”.

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