£93m lost after abolition of paper tax disc

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DVLA annual accounts show a £93m fall in revenue in the year following the removal of paper tax discs, which is higher than the government’s previous estimate of £80m

The DVLA’s accounts show revenue from vehicle tax fell from £6.023bn at the end of March 2015 to £5.93bn a year later.

The loss in income could be due to a combination of a rise in evasion as people now do not need to display a disc in their window screen and cleaner cars paying less or no tax.

The Department for Transport conducted research which previously estimated a loss to the exchequer of around £80 million, specifically they estimated annual losses would rise from £35m in June 2013 to £78m in June 2015.

There are now concerns that the figure could continue to rise in the following years because of the increase in the amount of people avoiding paying their vehicle tax.

RAC spokesman Simon Williams said: ‘It is worrying that the reduction in revenue from vehicle tax has exceeded the government’s own estimate. Some may argue that a £93m loss is only £13m higher than expected, this represents an increase of £58 million on the corresponding period before the tax disc was abandoned and far exceeds the £10 million savings arising from no longer issuing tax discs. This loss is a significant sum and one that merits further investigation.’

The RAC believes that another roadside survey of unlicensed vehicles should be carried out a year earlier than normal to get an up to date assessment of the evasion condition.

Williams states: ‘If this were to find that the number of untaxed vehicles is still at the same rate as when the last survey was conducted or, worse still, has increased, then action needs to be taken urgently to counter this.

‘It would be extremely worrying if we were to find that car tax evasion has increased from the 560,000 figure estimated in June 2015. We just hope that this doesn’t prove to be the tip of the iceberg and that the figure does not keep on rising, especially as the DVLA had predicted the new system would lead to savings of £10m.’

 

 

Amy Austin | Reporter, Accountancy Daily [2016-2019]

Amy Austin was reporter, Accountancy Daily and Accountancy magazine, published by ...

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