Do you drive for an online platform?

HMRC are sending letters to certain drivers whose customers use online applications (apps) to book them. HMRC have information that the drivers they are writing to have not declared some or all of their income earned from driving. This means that the drivers who receive these letters may owe tax to HMRC. The letters also include a certificate of tax position, which HMRC ask the drivers to complete and return to them.

The aim of the letters is to encourage drivers to bring their tax position up to date.

What should I do if I receive a letter?

Do not ignore the letter. You should respond to HMRC within 30 days, even if you do not have any income to tell them about.

HMRC have information that shows you have earned income from driving customers who book using an online app, such as Uber or Lyft. They have carried out risk assessments and have information that shows you may not have told HMRC about all of your income.

This means that your tax position may be wrong or that you may not have paid enough tax.

You should check your previous tax returns to ensure that they are complete and correct to the best of your knowledge and belief. In particular, you should check that you have included all the income you have earned from your driving and deducted all the allowable expenses you have incurred.

The exception to this is if your gross income from driving falls completely within the trading allowance.

Note that you should include details of all your taxable income on your tax return. So if you have other sources of income, check that you have also included these.

What if I have income I need to tell HMRC about?

If you need to tell HMRC about income that you have not disclosed to them, the letter indicates you can use the online Digital Disclosure Facility or Disclosure Service to do this.

You need a Government Gateway user ID and password to use the Digital Disclosure Facility. If you do not already have a user ID, you need to create one. You can do this by registering for HMRC online services.

You should tell HMRC that you intend to make a voluntary disclosure. You can do this by selecting option 1 in the ‘certificate of tax position’, or by writing separately to HMRC to advise them. You can also telephone HMRC on the number at the top of the letter. HMRC will send you an acknowledgement letter. This will tell you your Disclosure Reference Number (DRN) and your Payment Reference Number (PRN).

You should use the DRN whenever you contact HMRC about your voluntary disclosure.

You should use the PRN when you pay any tax that you owe in relation to your voluntary disclosure.

What if I do not have income I need to tell HMRC about?

If you check your tax returns and you do not have undisclosed income that you need to tell HMRC about, including the case where all of your undisclosed income is exempt under the trading allowance, you should write to HMRC to explain your tax position.

If you do not respond to HMRC’s letter they are likely to follow up. They will probably send you another letter in the first instance. If you fail to respond, HMRC may decide to open a compliance check into your tax return if you have submitted one.

Should I complete and sign the certificate of tax position?

There is no legal obligation on you to complete the certificate of tax position and return it to HMRC.

If you complete and sign the certificate of tax position, and in doing so make a false declaration, HMRC can prosecute you. So, you should treat the certificate of tax position with caution.

It is likely to be preferable to respond to HMRC by letter. This is particularly the case if your tax affairs are not straightforward.

HMRC have confirmed that they will accept a response by letter as an alternative, if you choose not to complete and sign the certificate of tax position.

What happens next?

You have 90 days from the date of HMRC’s acknowledgement letter to work out and pay any tax that you owe. You can use the Digital Disclosure Facility to work out and pay the tax.

Will I have to pay penalties and interest?

If you have to tell HMRC about income in response to their letter, they will treat your disclosure as a prompted disclosure. You may have to pay a penalty, unless you can show that you had a reasonable excuse for not telling HMRC about the income, or that you made a genuine mistake (you did not tell HMRC about the income but took reasonable care to try to get your tax right).

HMRC charge interest on tax that you pay late. So, you will probably have to pay interest on any tax that you pay as a result of making a disclosure.

You can work out (‘self assess’) the penalties and interest you have to pay using the Digital Disclosure Facility. The Facility has calculators to help you with this.

What if I cannot pay all the tax I owe?

If you owe tax, but cannot afford to pay it all in one payment, contact HMRC. You can ask HMRC about setting up a Time to Pay arrangement. If HMRC agree to offer you Time to Pay, this will spread the payments of tax that you owe over several months.

How does this affect the licensing application tax check?

From 4 April 2022 in England and Wales, when you renew a taxi, private hire or scrap metal licence, you have to complete a tax check.

A tax check confirms that you are registered for tax, if necessary.

If you bring your tax affairs up to date now, this may help you when you are completing the licensing application tax check.

If you are unable to renew your licence because:

• you need to complete a tax check, and

• you are not registered for Self Assessment for the year being checked,

you should register for Self Assessment and then try to complete the tax check again.

Where can I find more information or help?

An example of the letter and the certificate of tax position is available to view on the CIOT website.

There is HMRC guidance about how to make a voluntary disclosure on GOV.UK.

There is HMRC guidance about licensing application tax checks on GOV.UK.

You can find more information about tax penalties on our website.

You can find more information about what to do if you cannot pay your tax bill on our website.

If you are unsure of your tax position, you should seek independent advice. If you can afford to pay a professional tax adviser, you can find more information on how to find one on our website.

If you are on a low income and cannot afford to pay for a professional tax adviser, you should contact the tax charity TaxAid, who may be able to assist you.

If your health or personal circumstances mean that you find it difficult to deal with your tax position, you can contact HMRC.