The HMRC has begun the process of investigating hundreds of Uber drivers suspected of not reporting all their income, typically the ones who use apps such as Uber, Ola and Bolt. HMRC is chasing the private hire taxi drivers for unpaid tax as new rules revealed they have been working under the table for years.
It doesn’t include black cab drivers, who have different licensing requirements. There are more than 100,000 private hire drivers in London alone and just 22,000 traditional black cab drivers. It indicates that more people use personal hire services over black cabs. From April 2022, the government will ensure that private-hire drivers are fully assessed, which will be required every three years. That’s why you need a business registration number, which you obtain from HM Revenue and Customs.
According to HMRC, this is a great new approach to addressing the tax gap. People who operate in the hidden economy do so because they’re unaware or unsure of their tax obligations. We need to ensure we’re encouraging everyone to pay the relevant taxes. This new policy will help us get the money we’ve been missing from the hidden economy. Uber insists it will fully comply with HMRC’s investigation into its business affairs and hand over all information requested. Still, the taxi giant is arguing that its drivers are self-employed.
It was despite a historic ruling in February 2021 that concluded that the Uber drivers are, in fact, employees, and not independent contractors. So, drivers are now entitled to pension contributions and holiday pay.
If individuals respond late to the summons or fail to attend court, they can face a penalty fine and more thorough scrutiny of their financial affairs. HMRC will send letters to those who haven’t declared their correct tax or paid their valid tax by September 5th until the end of the year. If drivers believe they may not have filled out their tax returns correctly, they can make a voluntary submission.
If drivers don’t think they filled out their taxes correctly, they can make a voluntary filing. In return, HMRC will send an acknowledgement letter, and they’ll have 90 days to pay the tax.
According to HMRC, the new tax system will likely result in £270 million in tax evasion being prevented over the next five years.