The Chair to advise the Committee of any items on which members of the public have requested to speak and advise those members of the public present of the details of the Council’s public participation scheme.
For those members of the public who have submitted any questions or statements, please note, a three minute time limit applies to each speaker and you will be asked to speak before Councillors debate the issue.
Minutes:
Mr Mike Davis spoke to the Committee in regards to tax evasion within the local taxi trade.
Dear Committee members,
A1 Ace Transport Services have for the last decade brought to the attention of the Council the widespread VAT evasion within the local taxi trade. The two prior Licensing Managers, Julia Braeburn and Ian Carter, had also introduced illegal policies which we had to fight, from pricing policies to overcharging of fees, both of which John Rendell could explain what happened to the policies and officers.
Last year the Licensing Department agreed to launch an investigation in to the illegal “competitive advantage” of our tax evading competitors. There was agreement that operators who were evading tax in this way were not “fit and proper” and therefore should not hold a license.
It seemed that the investigation had ground to a halt even though the Council had written to all operators, nothing would happen. On several levels this was wrong and if not followed through, it would leave the authority of the Council somewhat weakened in the eyes of those who flouted the law.
From our perspective the situation had reached the point where we were prepared to take the Council through a legal process for knowingly failing to operate the Licensing regime as laid out in the terms and conditions.
If we could not find a way forward, it would be the second time that we would take the Council through a legal process. The first being the illegal setting of fees, which ended up with the tax payer having to spend £20,000 on a National Audit Office investigation. In the report Taunton Deane Borough Council (TDBC) were found to be in denial as to the law and had not showed any speed in fixing their illegal position. His comment of ‘but for the tenacity of Mr Davis I was in no doubt that TDBC would still be setting fees illegally’ proved that I did not back down when I was sure of my position. James Button the well-known Licensing Lawyer had agreed to represent me should Somerset West and Taunton Council (SWT) not proceed with getting rid of operators who were clearly operating outside the law.
In short you knew operators were evading VAT payments and were not doing anything about it. There had been more than sufficient time to do something about it.
The Licensing Specialist responded with the following:-
The purpose of Licensing was the protection of the public. He explained that any member of the public stepping into a motor vehicle driven by a stranger, must be able to trust the driver. He highlighted: Were they honest? Were they competent? Were they safe? Were they trustworthy?
As required by the Local Government (Miscellaneous Provisions) Act 1976, we must not grant a taxi or private hire driver licence unless we were satisfied that the applicant:
· Had held a driving licence for a minimum of 12 months;
· Had the right to work in the UK; and
· Was a ‘fit and proper person’.
The legislation did not define what a ‘fit and proper person’ was or what the Council must consider in reaching that verdict so it was at the Council’s discretion. There were however, naturally, common practices across Councils, such as:
· Criminal record check – covered by the ‘DBS check’;
· Driving licence checks for existence of any endorsements e.g. points;
· Results of medical examination (carried out by doctor); and
· Knowledge test.
It followed that once a person was licensed as a driver, that their licence would be revoked if they no longer held a valid driving licence, did not have the right to work in the UK or were no longer considered ‘fit and proper’.
Mr Davis’ argument was that ‘if they were fiddling their taxes, how did you know if they were not fiddling their customers?’
To be clear, the Council did not have to satisfy itself that drivers and owners of taxi and private hire vehicles had their tax affairs in order.
He advised that a business needed to be registered for VAT when its taxable turnover was more than £85,000. According to Mr Davis, it was reasonable to expect taxi businesses with 4 or more licensed vehicles to generate income above £85,000 and therefore a VAT registration was necessary. There were around 8 businesses and taxi radio circuits each with 4 or more vehicles; ergo 7 businesses which Mr Davis believed should be VAT registered.
Clearly it was of some concern if there were businesses operating locally who were breaking the law. It was on that basis that an investigation into Mr Davis’ allegations began around August 2018, the aims of which were:
· To identify businesses who should be VAT registered;
· To report to Her Majesty’s Revenue and Customs (HMRC) businesses who were not registered but should be; and
· To seek to instigate, suspend or revoke an individual’s drivers licence if it was judged that they were no longer ‘fit and proper’.
A questionnaire was sent to the 8 drivers/operators with 4 or more licensed vehicles to establish whether VAT registration was required. Unfortunately, not all the recipients of the letter were co-operative and the investigation dragged on a number of months, coinciding with the formation of the New Council and reorganisation. Mr Davis was contacted in January 2019 to be advised that the investigation would be put on hold until the service had become stable. At that point, 1 referral had been made to HMRC, 2 companies were confirmed to be VAT registered and further enquiries would continue into the other 5.
During the discussion, the following points were raised:-
· Councillors appreciated the concerns raised by Mr Davis, however, the responsibility to monitor VAT fell with HMRC and that it wasn’t appropriate for SWT to check whether operators were registered for VAT.
Mr Davis explained that as operators had to apply to be licensed, it was not unreasonable to ask if applicants were VAT registered as part of the application process.
· Councillors queried whether Mr Davis had already reported the companies he believed not to be registered to HMRC?
Yes he had but HMRC could not divulge any information on the investigations to him and it appeared that nothing was ever done.
· Councillors agreed that it was a difficult situation and that officers should seek legal advice.
· The Licensing Specialist would seek legal advice on what fell within the definition of ‘fit and proper person’.
· Mr Davis advised the Committee that he had made his position clear and that it was a moral question and that SWT should include VAT registration within the ‘fit and proper’ criteria.