Fears of rise in car tax evasion after fall in revenue

REVENUE from vehicle excise duty (VED) fell by £93 million in the year after the abolition of the paper tax disc, official figures show.

The annual report and accounts of the Driver and Vehicle Licensing Agency’s (DVLA) show revenue from vehicle tax fell from £6.023 billion in 2014/15 to £5.930bn the following year.

Motoring organisation the RAC described the figure as “a significant sum” that merits further investigation, amid fears that vehicle tax evasion has increased.

When the paper disc was ended in October 2014, the UK Government said it would eventually save the DVLA £7m a year.

A Department for Transport survey conducted in June last year revealed the number of motorists failing to pay VED had more than doubled since the end of the paper disc.

The data showed 1.4 per cent of vehicles in use were unlicensed, which could cost £80m in potential lost revenue each year, although some of this would have been recovered through enforcement activity or payment by arrears.

The 2013 figure was 0.6 per cent, costing £35m.

RAC spokesman Simon Williams said: “While there are several factors that may have adversely contributed to a reduction in revenue – including unfamiliarity with the new system and greater numbers of cheaper to tax low carbon emission vehicles being taxed – we need to fully understand how great a part evasion plays.

“We therefore urge the Department for Transport to carry out another roadside survey of unlicensed vehicles this year to fully assess the untaxed vehicle situation before action is taken.”