Street with cars parked

DVLA revenues down £200m after tax discs scrapped

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The Driver and Vehicle Licensing Agency (DVLA) collected less vehicle tax after paper tax discs were replaced in October 2014 by an online system.

Figures obtained by the Financial Times in a Freedom of Information request show that the amount of vehicle exercise duty collected from motorists fell by more than £200m in the six months after the tax disc was abolished.

Person typing on a laptopBetween October 2014 and March 2015 the agency collected around £2.7bn in vehicle tax -- £223m lower than the same period a year earlier. In contrast, the £3.2bn paid by motorists between April and September 2014 was flat compared to a year earlier, the FT reported.

The National Audit Office had predicted no "material increase in lost revenue" as a result of the change, but critics had warned that it would lead to confusion among motorists.

As well as abolishing the paper tax disc, the DVLA introduced a requirement for new owners to tax vehicles when buying them, rather than rolling over the previous owner's vehicle tax.

The DVLA's latest annual report shows that the changes cost £1m, most of which was spent on IT.

The National Audit Office wrote in the report that the overhaul "has likely contributed to an initial increase in reported levels of non-payment, which has led to additional compliance and enforcement activity".

A debt collection agency has been contracted to claw back the missing payments.

DVLA chief executive Oliver Morley noted, however, that almost 99% of all vehicles on the road are correctly taxed.
"That's around £6bn in vehicle tax passed to the Treasury every year," he said.

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