Tax conditionality: what is it?

Tax conditionality

Since the start of April 2022 businesses in some industry sectors in England and Wales are required to complete a GOV.UK check saying how they pay their tax bills on income from their trade. Failure to do this means they won’t receive a licence to trade from their local authority. According to at least one survey, nearly 30% of local authorities fear that many affected businesses in their area are not aware of the new rules. This is despite online publicity from HMRC and letters sent by local authorities to relevant businesses.

Which businesses?

The licences subject to the new checks are those for:

• taxi drivers
• private hire vehicle drivers and operators
• mobile collector licences for scrap metal dealers
• scrap metal dealers operating from sites.

Checks

Anyone operating one of the businesses mentioned will be required to pass a relatively simple tax check. The type depends on whether they’re applying for a licence for the first time or renewing one.

• for a first licence, they won’t need to complete the tax check. Instead they’ll need to confirm to the local authority that they’re registered or will register for tax with HMRC and that they’re aware of their tax obligations
• for renewing or applying for a different licence,they'll have to do a full tax check which can be done online.