DVLA reports £93million in revenue lost after ditching of tax discs

Paper tax discs were abolished last year.
Paper tax discs were abolished last year.
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The RAC has raised concerns over a £93million loss of revenue to the DVLA following the abolition of paper tax discs.

The motoring organisation, which feared scrapping the disc last year would lead to a loss in revenue due to increased evasion, is concerned the loss has proved to be even greater than the Government’s estimate.

The DVLA’s newly-published annual report shows revenue from vehicle excise duty has fallen by £93million in the year since the need for a paper disc was scrapped.

A year ago the Department for Transport conducted a roadside survey which projected that about 1.5 per cent of all vehicles on the road were unlicensed – the equivalent of about 560,000 vehicles.

This compared to 0.6 per cent in 2013 – the equivalent of 210,000 vehicles.

As a result the Department's statisticians estimated a loss to the Exchequer of around £80million.

The RAC says another roadside survey of unlicensed vehicles should be carried out this summer – a year earlier than normal – to provide an up-to-date assessment of the evasion situation.

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 £93million loss is only £13million higher than expected, but it represents an increase of £58million on the corresponding period before the tax disc was abandoned and far exceeds the £10million savings arising from no longer issuing tax discs. This loss is a significant sum and one that merits further investigation.

“While there are several factors which 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.

"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.”

Now that paper tax discs have disappeared from vehicles' windscreens, payment is logged within the DVLA database, and the country’s network of automatic number plate recognition cameras are relied upon to catch motorists who avoid paying – deliberately or not, together with a debt collection agency which is used to chase non-payers.