The Comptroller and Auditor General (C&AG) has released his annual report on the DVLA’s collection of Vehicle Excise Duty (VED). VED is tax which must be paid for most types of vehicles used, or kept, on public roads in the United Kingdom. In 2021-22, the DVLA Trust Statement recorded £7,216 million of VED revenue and enforcement fines and penalties, an increase of £286 million (4.13%) on 2020-21 levels.
The C&AG’s report this year concludes positively on how DVLA has carried out its core tax collection responsibilities.
It also describes how:
- VED is currently forecast by the Office for Budget Responsibility (OBR) to peak in 2024-25, earlier than previously thought, as a result of the increased uptake of electric vehicles, which are exempt from the tax;
- compliance levels for VED remain, at 98.2%, consistent with the last measurement (98.4%) which was taken before the pandemic, in 2019; and
- the DVLA has returned its revenue from enforcement to a level close to pre-pandemic measurement, but only partially restored its levels of enforcement activity. Many first-line activities, including wheel-clamping, stickering and automatic penalties, returned almost to pre-pandemic levels, but enforcement actions representing higher escalation points – including prosecutions and out of court settlements – remained significantly curtailed. Relevant capacity has been constrained both at the DVLA itself and in partner organisations.
The C&AG makes recommendations both to the DVLA on the continued recovery of enforcement activity levels, and to HM Treasury in respect of using the 2020 call for evidence on VED to determine the most suitable future for VED, taking into account the long-term erosion of the VED tax base as electric vehicle uptake accelerates.