Autumn Budget 2018 – Conditionality: hidden economy

In December 2017 the government issued a consultation entitled ‘Tackling the hidden economy: public sector licensing’ in response to the hidden economy. This refers to illegal economic activity which does not comply with governmental reporting requirements and is therefore not taxed. HMRC intends to target those in the hidden economy to close the tax gap and to level the playing field between taxpayers.

The 2018 Budget announced that the government are considering legislating at Finance Bill 2019/20 to introduce a tax registration check linked to licence renewal processes for some public sector licences.

Licenses issued in the following sectors were named as being suitable in the original consultation document:

  • 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

The sectors identified are ones which the government identified as high-risk, and it is intended that the license application process would be amended to require an individual to provide proof they are registered correctly for tax purposes to obtain the license.

Affected will be those who are not registered with HMRC but wish to renew a public sector license in a sector listed above. When attempting to obtain or renew a license, an individual will be unable to certify their tax registration, and the likely result will be compliance activity from HMRC.