Vehicle tax prosecutions up by a third - parallels with personal tax returns?

18 August 2015

George Bull

The latest statistics from the Ministry of Justice show a 33 per cent rise in court prosecutions for failure to pay vehicle tax – a figure that raises questions about the impact of the decision to abolish paper tax discs.

Back in April 2011, in the early days of the coalition government, the cabinet office launched the Red Tape Challenge – a programme designed to cut unnecessary regulation and save taxpayers money. Civil servants and members of the public were invited to submit ideas which would then be considered for action by ministers.

One of the project’s trumpeted successes was the abolition of the vehicle excise duty (VED) paper tax disc which was withdrawn from 1 October 2014. This, we were told, would reduce paperwork and save the public over £12m per year.

However, the latest prosecution figures raise questions as to whether the policy has led to higher rates of non-compliance, and simply pushed the red tape burden onto the courts.

In 2013, prior to the introduction of the new rules, evasion rates for vehicle duty were low – just 0.6 per cent of traffic on Britain’s roads was driving without a valid tax disc, costing an estimated £35m in lost revenue, according to the Government’s own figures.

Under the new regime, drivers still receive an annual written reminder prior to the tax being due, but they no longer have the daily reminder in their windscreen – a possible factor behind the higher non-compliance rates.

Confusion may also be playing a role. Motorists are now no longer able to sell a car with the remaining tax, and buyers must ensure that car tax is paid before driving away. These reforms to a system that had been largely unchanged for 90 years have led to many people being caught unawares, prompting criticism from the AA about poor communication from the DVLA.

Finally, the increased use by the police of Automatic Number Plate Recognition (ANPR) cameras to identify vehicles that are not taxed is also likely to be increasing detection rates among non-payers.

The result is that the DVLA is clamping more than 8000 untaxed vehicles a month and vehicle tax prosecutions are now clogging up the courts. Along with TV licence evasion and common assault cases, they now account for over half of all summary non-motoring offences in the magistrates courts – hardly the liberation from bureaucratic red tape that was promised.

Are there parallels to be drawn here with the government’s digital strategy for personal tax returns? That is also designed to eliminate paper, automate processes and put the onus very firmly on the taxpayer. Will it truly reduce compliance costs all round and make life easier for all involved in the tax system or will it, like the VED changes, merely be displacement activity and shift the burden elsewhere – onto you and me?