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Finance Act 2014

Background Note

15.Currently, a paper based vehicle licence, trade licence or a nil licence is issued by the Driver and Vehicle Licensing Agency (DVLA) or the Post Office on behalf of the DVLA, following a valid application to license a vehicle.  Historically, this has provided a visual aid for demonstrating the payment of VED and helped aid the identification of unlicensed vehicles.

16.The DVLA and police now rely on DVLA’s electronic vehicle register and use tools like Automatic Number Plate Recognition to ensure that vehicles are correctly licensed and that VED has been paid.  Largely due to electronic enforcement, motorists are better informed of their responsibility to ensure that their vehicles are continuously licensed.  Enforcement from the record has helped to improve compliance with non-payment of VED running at a historical low.  Current estimate of VED evasion is 0.6 per cent which implies VED is a tax with which people are very compliant.

17.As the benefits of a paper vehicle licence, trade licences and nil licence have significantly diminished over time, the Government now believes that the requirement to display a paper licence is redundant.

18.Various provisions in VERA were drafted on the basis of there being paper based vehicle licences, trade licences and nil licences so now need to be amended.

19.Currently, a person must make a separate application for a rebate after having notified DVLA that a vehicle was stolen, destroyed, a nil licence was obtained, another licence has been taken out at a reduced rate, notified off road, sold or disposed, or exported.  The Government now believes that there is no longer a need for a separate qualifying application for a rebate now that there will be no requirement to return the paper tax disc. The requirement is that registered keepers, who have satisfactorily notified the Secretary of State (DVLA) of the relevant events described above, will be entitled to a rebate of their VED.

20.The requirement to display vehicle licences and nil licences is contained in the Road Vehicles (Registration and Licensing) Regulations 2002. Amendments to the Road Vehicles (Registration and Licensing) Regulations 2002 are intended to be made which will remove the requirement to display vehicle licences, trade licences and nil licences.

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