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Vehicle Excise Duty Accounts 2006-07

The evasion of road tax by motorists and motorcyclists has increased significantly, the National Audit Office has reported.

According to the Department for Transport’s roadside survey in June 2006, Vehicle Excise Duty evasion was running at some 5 per cent (£217 million), up from 3.6 per cent (£147 million) the previous year. The Driver and Vehicle Licensing Agency has little prospect of achieving its evasion target of 2.5 per cent by December 2007. It also has little chance of meeting its related Gershon efficiency target to generate – through reduction in evasion – an additional £70 million in revenue each year by the end of March 2008.

The survey also estimated that over a third of motorcyclists (37 per cent) are unlicensed, an increase from 30 per cent in the previous year.

Actions started by the Agency during 2006-07, but too late to influence the 2006 survey results, included doubling wheel-clamping efforts, the introduction of debt collection agencies and new publicity material. The Agency believes these actions will reduce future evasion levels.

The target of halving the vehicle underclass of evaders (unlicensed vehicles often associated with crime-related activities) is unlikely to be achieved. Police statistics indicate that about three-quarters of persistently untaxed vehicles are used by people involved in some other criminal activity. This target set by Ministers was removed from the Agency at the end of 2006-07 on the grounds that it does not have sufficient scope to influence the vehicle underclass. The NAO has highlighted the need to retain a focus on tackling this group and recommends that the Department and the Agency work with the Home Office to devise a suitable new target and measures.

Motorcyclist evasion of VED

Today’s report concludes that the higher and increasing motorcycle evasion rates (37 per cent in 2006-07, up from 30 per cent in the previous year) threatens public confidence in the DVLA’s enforcement regime. The Agency recognises this and, in line with a recommendation last year by the NAO, plans to review in 2007 the effectiveness of its advertising and enforcement operations specifically targeted at motorcyclists.

Non-payment of Late Licensing Penalties

Over 60 per cent of those who did not pay their Late Licensing Penalties (see note 3 below) were not pursued through the courts or through debt collection agents in 2006-07. During the year, the DVLA trialed the use of debt collectors to pursue unpaid Late Licensing Penalties with encouraging initial success rates of 20 per cent. Hardened evaders who do not respond to debt collection actions will be targeted through wheel-clamping campaigns.

The NAO recommends that the Agency should analyse regularly the proportion of Late Licensing Penalties pursued through the courts and via debt collection agencies, first, to confirm that these recovery methods remain the most effective overall and, secondly, to determine the extent to which additional spending on recovery action has a deterrent impact and is cost effective.

'I was concerned last year that the significantly higher rates of VED evasion by motorcyclists might undermine confidence in the DVLA's enforcement regime. My concern is even stronger this year, given the sharp jump in the evasion by motorcyclists, and by motorists more generally.' 'It must be brought home to persistent non-payers of VED, whether motorcyclists or car drivers, that they will sooner or later be subject to enforcement action.'

Sir John Bourn, head of the NAO

Notes for Editors

  1. Press notices and reports are available from the date of publication on the NAO website, which is at Hard copies can be obtained from The Stationery Office on 0845 702 3474.

  2. The Comptroller and Auditor General, Sir John Bourn, is the head of the National Audit Office which employs some 850 staff. He and the NAO are totally independent of Government. He certifies the accounts of all Government departments and a wide range of other public sector bodies; and he has statutory authority to report to Parliament on the economy, efficiency and effectiveness with which departments and other bodies have used their resources.

  3. Under the Continuous Registration scheme introduced in 2004, registered keepers who fail to re-license their vehicle or declare it as Off-Road within 2 months of expiry of the last licence, receive a Late Licensing Penalty. They can settle the offence on payment of a £80 penalty (reduced to £40 if payment is made within 28 days). [See also paragraph 51 of the C&AG's report.]

PN: 38/07