12/12/2017
Checks on tax status to be part of the licensing process (UK)
Decisions on whether licences required to operate businesses in certain sectors should be granted or renewed would become conditional on checks to confirm the individuals making the applications are appropriately registered for tax, under proposals by HM Revenue & Customs to introduce the conditionality measures announced in Autumn Budget 2017.
‘Tackling the hidden economy: public sector licensing’ identifies the following sectors that are vulnerable to ‘hidden economy’ activity, have existing licensing conditions that broadly align with tax compliance measures and could potentially benefit from measures to drive up regulatory standards
- private security
- taxi and private hire vehicles (PHVs)
- waste management
- houses in multiple occupation (HMOs) and selective licensing in the private rental sector
- scrap metal
- retail and trade
Depending on their circumstances, individuals or businesses can have different requirements to register for tax but the consultation focuses on the following three areas where checks can help determine whether they have fulfilled their obligations to be appropriately registered
- Self Assessment – people setting up or running businesses should be registered for SA in order to pay income tax and Class 2 NICs; people already paying tax through PAYE also need to register if they have additional sources of income
- enrolling employees for tax. Income tax and NICs is then collected via PAYE
- Corporation Tax: private limited companies need to register for Corporation Tax within three months of starting to do business
Key principles underpinning the process of determining how those applying for licences should be properly registered include
- first time applicants should be signposted to tax obligations and HMRC services to ensure they understand their tax status and are able to register as soon as possible
- checks at the renewal stage would require applicants to confirm and provide evidence of their tax registration status
- there would be no additional requirements imposed upon the licensing authorities
Other chapters discuss how HMRC would seek to minimise burdens on applicants and explore the potential of the proposals to provide the basis for integrating simple tax checks into more of the essential services used by businesses.
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