Committee of Public Accounts: Press Notice

EVASION OF VEHICLE EXCISE DUTY

Publication of 5th Report, Session 2007-08

Edward Leigh MP, Chairman of the Committee of Public Accounts, today said:

"Motorists and motorcyclists who refuse to pay road tax are stealing from law-abiding taxpayers and unlicensed cars are often associated with other forms of crime. And yet the Department for Transport and the DVLA are losing ground in their fight against VED evasion. The evasion rate among road users in general jumped to 5 per cent in 2006-07 (from 3.6 per cent in 2005-06).

"Motorcyclists are particularly liable to evade road tax. Nearly 40 per cent of motorcycles are now unlicensed. If the DVLA's motorcycle enforcement regime is not to be a complete laughing stock, then the Agency and the Department must make the most of new powers to enforce VED off public roads - and strongly consider more severe measures such as impounding unlicensed motorcycles. Large parts of the biking community are cocking a snook at the law.

"The DVLA's performance in tackling persistent evaders of road tax has been poor. The Agency and Department for Transport must work more with the police and local authorities to tackle offenders actually out on the road, rather than simply by using paper records. And ways of using new technology to detect evaders must be vigorously pursued. The alternative is an ever increasing belief among road users that the evasion of road tax is a low risk activity.

"The National Audit Office discovered that motorists who delay renewing their VED could thereby avoid paying for one month's worth of road tax, without risk of being sent a penalty notice. This loophole should never have been allowed to exist."

Mr Leigh was speaking as the Committee published its 5th Report of this Session which, on the basis of evidence from the Driver and Vehicle Licensing Agency (DVLA) and the Department for Transport, examined weaknesses in the current system; tackling persistent evaders and motorcyclists; emerging threats to VED and enforcement; and false and foreign number plates.

Evasion of Vehicle Excise Duty (VED) rose to 5% (£214 million) in 2006, up from 3.6% in 2005. Amongst motorcyclists, the evasion rate increased to 38% from 30% the previous year.

The Department for Transport oversees the DVLA which is tasked with tackling evasion. The Agency accepted that it would not achieve its targets of reducing evasion to 2.5% by December 2007 and saving £70 million a year by the end of 2007-08.

Not licensing a vehicle and registering the keeper increasingly reflect the intention to avoid congestion charges and prevent identification of criminals, as well as evasion of payment of VED.

The Department and the DVLA were surprised by the increase in the evasion rate in 2006. This calls into question the effectiveness of the DVLA's current enforcement approach and whether it understands patterns of and motivations for evasion well-enough to design fully effective counter-measures.

Working with partner organisations, such as the police and local authorities is the most effective way to tackle persistent evaders. Greater data sharing with other interested parties would help to identify emerging trends and patterns in evasion. In the medium term the Department and the DVLA may need to move to increasingly advanced technological solutions to VED evasion.