HM Revenue & Customs is suing thousands of private drivers for unpaid taxes as new registration requirements expose the scale of undeclared income among drivers who operate via online apps.
HMRC said this week it would write to around 4,000 drivers booked through apps such as Uber, Ola and Bolt, whom it suspects have not declared all of their income.
Since April, the government has carried out additional tax checks on private drivers’ license renewal applications, a process all taxi and private hire drivers go through every three years.
Steve McNamara, general secretary of the Licensed Taxi Drivers Association, said private drivers who previously failed to pay their taxes are now being caught trying to renew their license without an HMRC code.
He said “many” private drivers, most of whom operate through ride-sharing app Uber, have not paid the correct amount of tax and he expects there to be “dozens of them.” thousands more” over the next two and a half years. as licenses are renewed.
“The Revenue has missed tens of thousands [of pounds] income for years,” he added.
HMRC said the missing taxes relate to private drivers who operate on booking apps – not ‘black cab’ taxi drivers, who have separate licensing requirements.
McNamara added that there were around 22,000 black taxi drivers and over 100,000 private drivers in London.
Uber told the FT that its drivers were self-employed for tax purposes, so it could not verify what the drivers put on their tax returns. He said he was working with HMRC to ensure 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 of underpaying 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 giving drivers 90 days to calculate and pay the tax due.
The requirement for private drivers to include their HMRC code in the license renewal process follows the recommendation of a report in 2018. McNamara suspects most of the drivers prosecuted by HMRC for unpaid taxes will come from London and other major UK cities, where app-powered private hire cars are most popular.
Some apps such as Uber, Ola, and Bolt are exclusively for private rental cars. Other apps, such as Free Now, allow users to choose between a taxi and a rental car.
In February 2021, the Supreme Court issued a landmark ruling that confirmed Uber drivers are workers, not independent contractors. This means that Uber drivers are entitled to pension contributions and paid vacations, 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 “sent to people who have made money driving customers who have booked private hire cars through online driving apps”.