Scrapping of paper vehicle tax discs costs DVLA almost £100m as revenue plummets

In 2014, the DVLA scrapped the displaying of a paper tax disc, as for the first time in 90 years drivers would resort to a new procedure and meet the new rules, by renewing their car tax by phone, DVLA website or at the post office.

The change was put into place in order to make the process of fining those without tax discs more achievable. It meant that a network of Automatic Number Plate Recognition cameras could be linked to the DVLA in an attempt to spot those who have not paid up, committing tax evasion.

Despite a constant effort from the DVLA to combat tax evasion, it was reported last week that the latest figures from the DVLA show revenues have in fact plummeted from £6.02bn to £5.93bn – with many left blaming the changes on the removal of the windscreen tax disc.

RAC described the figure as a ‘significant sum’ that certainly merits further investigation; it is thought that the revenue fall could be due to vehicle tax evasion increasing.  Back in 2014 when these changes were released via media channels, the Government stated that the change would eventually save the DVLA around £7 million a year. But research done in a survey conducted by the Department of Transport revealed that the number of motorists failing to pay vehicle excise duty had more than doubled since the scrapping of the paper tax disc.
Data collated showed that ‘1.4% of vehicles being driven were unlicensed, which could cost about £80 million in potential lost revenue each year, although some of this will have been recovered through enforcement activity or payment by arrears. ‘

The DVLA’s latest annual report puts the cost of digitalising the service close to £1m. In the report, the National  Audit Office said that the change to digital has “likely contributed to an initial increase in reported levels of non-payment.”

Addressing the plummet in revenue, RAC spokesman Simon Williams said ‘We urge the Department for Transport to carry out another roadside survey of unlicensed vehicles this year to fully assess the untaxed vehicle situation.” The surveys could then be compared to reassess the situation and to see if action needs to be taken urgently to counter this.