Last week’s Budget proposed a new tax evasion measure called “Conditionality”, aimed at ensuring that self-employed workers and businesses in certain sectors will have to prove they have registered for tax before they can obtain licences to operate.

Legislation will be introduced in 2020/21 making the renewal of licenses to: drive hackney cabs and private hire vehicles (e.g. minicabs); operate PHV firms; or deal in scrap metal, conditional on applicants demonstrating they are properly registered for tax. The idea is to make it harder for non-tax compliant traders to operate in the hidden economy. The new rules will apply in England and Wales from April 2022; and may be rolled out to Scotland and Northern Ireland in due course.
Commentators in the professional press are speculating that in time these rules will be extended to other business sectors; for example, anyone bidding for work from a public body.

What does it mean for me?
If you run a business (whether as a sole trader or otherwise) and have not registered with HMRC (e.g. for VAT, Corporation Tax, Income Tax, PAYE) you should be aware that the taxman is constantly hunting for ways of identifying so-called “ghosts”, that is people operating in the hidden economy. This new statutory measure is simply one more method of them identifying the non-compliant. The sensible thing is to register with HMRC as soon as is practical. However, you will need to give some thought as to how the earlier years are handled: in order to achieve the lowest level of penalties (and avoid prosecution!). You will probably need specialist assistance with this.

How can Lynam Tax Disclosure Experts help me?
Lynam Tax specialists have a vast amount of practical experience in managing tax investigations and tax disclosures. We can advise you on the best course of action and if appropriate, help you manage any necessary disclosures, in order to obtain the optimum outcome for you, your business and your family.

*For a free, private, no obligation consultation, call today:
Paul Lynam: 0845 643 9997
Andrew Nutbrown: 07718 778710