The introduction of tax conditionality
Tax conditionality is a term used for when the renewal of licences is dependent on compliance with tax obligations. Industries that could be caught are: private security, taxis and private hire vehicles, waste management, landlords with houses of multiple occupancy, scrap metal and even retailers and traders.
Under a system of tax conditionality, firms applying for licences to operate will be checked to confirm they are properly registered for tax, including PAYE for any employees. This ensures all such licensed businesses are within the tax system.
The introduction of such a requirement follows a consultation that was held in 2018 in relation to the use of tax conditionality as a way to tackle the ‘hidden economy’. We anticipate tax conditionality will be introduced by virtue of the Finance Act 2020.
Wider applications of the principle are also being considered, with further consultations being planned in relation to applications for government awards, authorisations or grants. The format of such wider applications is currently unclear. However, it would not come as a surprise if all licences, grants and even government contracts were to become conditional upon the business demonstrating complete compliance with tax legislation.