Risks of vehicle tax evasion

Tax it, don’t risk it. That’s the message of a DVLA campaign that warns motorists of the potential penalties they face if they fail to pay Vehicle Excise Duty (VED), otherwise known as car or road tax.

So what exactly is VED? How much do you have to pay, and are any vehicles or situations exempt?

And, most importantly, what are the risks and penalties of failing to make prompt payment?

Insurance Factory arranges insurance for compounded cars, including those that have been seized due to non-payment of road tax.

Let’s explore the topic in more depth, so you can avoid hefty penalties and fees, and stay on the right side of the law.

What is vehicle excise duty?

Vehicle Excise Duty is a tax levied on cars, motorcycles, motorhomes and other motorised vehicles registered in the UK that are used or parked on public roads. It’s payable each year – though see exemptions, below.

Money raised from road tax goes into general government funds used to pay for public services, including – but not limited to – roads. Other road users, such as cyclists and horses, don’t have to pay.

Up until 2014, you’d get a tax disc to display on your windscreen to prove you were up to date with payments.

Nowadays, you can check the tax status of any vehicle online.

So anybody can find out if a vehicle is untaxed and report it, which they might well do if it’s been parked in an inconsiderate way or abandoned. That could lead to the vehicle being seized, and the owner needing to pay penalties, fees, and insurance for compounded cars before they can drive it away from the pound.

What is the new DVLA campaign?

The DVLA clamps down – literally! - on untaxed vehicles.

In spring 2022, it launched an advertising campaign warning motorists of the possible consequences of skipping payments.

Its “tax it, don’t risk it” campaign features on billboards, radio, social media, print and digital channels.

The campaign targets those areas of the UK that had the highest number of enforcement actions against untaxed vehicles in 2021. These include: London (more than 97,000 actions), Birmingham (more than 52,000), and Manchester (more than 28,000). Other major cities also featured.

The campaign message is that untaxed vehicles are “hard to hide, easy to tax”.

Over 98% of vehicles are correctly taxed – but the owners of those that aren’t could receive a nasty surprise when they return to their vehicle to find it clamped or seized.

If it’s impounded, they’ll incur some hefty costs, which are likely to include that of insurance for compounded cars.

Who is responsible for paying road tax?

It’s the keeper of the vehicle who’s responsible for ensuring that the vehicle is taxed, though anybody can make the payment.

If a vehicle is found to be untaxed, penalties will be sent to the registered keeper’s address.

However, if you borrow someone else’s car, it’s also your responsibility to ensure it’s legal to do so: that means that the vehicle is taxed with a valid MOT certificate, and you’re insured to drive it.

So you could incur penalties if you drive a friend or family member’s car without checking if it's permitted to be on the roads.

How are keepers of untaxed vehicles caught out?

Regardless of whether or not you live in an area targeted by the “tax it, don’t risk it” campaign, there’s a high chance of being caught if you don’t tax your vehicle. There are several ways it could happen.

If you’re registered with the DVLA as the keeper of an untaxed vehicle, you could receive an automated enforcement penalty.

Plus, the DVLA has enforcement teams and wheel clamping partners who travel around the UK looking for vehicles that haven’t been taxed.

The DVLA can also devolve powers to local authorities and police forces. In 2021, there were 84 devolved power partners, who can take enforcement action against untaxed vehicles on roads in their area.

The police are also likely to run checks on your vehicle if you’re stopped for any reason.

Another factor is the growing usage of Automatic Number Plate Recognition technology in traffic cameras.

This collects data that can be used to track down untaxed vehicles, among other uses.

Plus, any member of the public could look up your registration plate online and report you for evading tax.

Yes, it really is pretty hard to hide a vehicle from the DVLA in the UK for very long! And if you take that risk, you are likely to incur penalties – which can mount up very quickly. So what could happen?

Late licensing penalty letter

If DVLA records show that you’re the registered keeper of a vehicle that’s untaxed, you’ll automatically be sent a late licensing penalty letter (LLP). You’ll have to pay your tax, plus a fine of £80 which is reduced to £40 if paid within 33 days.

If you fail to pay at this point, your case could be referred to debt collectors, incurring additional fees.

Out-of-court settlement letter

If you’re the registered keeper of an untaxed vehicle which is spotted on the roads, you’re likely to be sent an out-of-court settlement (OCS) letter.

If the vehicle does not have a SORN (see below), you’ll need to pay £30 plus one-and-a-half times the outstanding tax. If it does have a SORN but you’re using it on the roads anyway, then the penalty is £30 plus twice the outstanding tax.

Failure to pay up is a criminal offence, and you’re likely to be taken to court.

Your vehicle could also be clamped, which will incur additional fees.

Magistrates’ Court action

Failed to pay up after receiving an LLP or OCS? Then your case may well go to the Magistrates’ Court.

The standard penalty for an untaxed vehicle without a SORN is either £1,000 or five times the amount of tax chargeable, whichever is greater.

For a car with a SORN in force that was nonetheless being used on the roads, the penalty is either £2,500 or five times the tax, whichever is greater.

So by trying to avoid paying car tax, motorists risk far bigger costs in terms of fines and inconvenience.

Plus, you’ll have a criminal conviction, which can have implications in other areas of your life, like your career and how much you pay for insurance.

Clamping

If enforcement officers track down or come across your untaxed vehicle parked on the street, they may well clamp it.

To get the wheel clamp released, you’ll need to pay a fee of £100 within the first 24 hours. That’s on top of any other penalties.

If you don’t take prompt action, there’s a high chance that your vehicle will be taken to the car pound. This will incur extra penalties and fees, plus a whole lot of hassle!

Trying to remove the wheel clamp yourself is a criminal offence.

Impounding of your vehicle

Motorists who ignore wheel clamps, or are away when their vehicle is clamped, are likely to return to their vehicle to find it’s been towed away.

It’s a pretty alarming moment! And unfortunately, it’s about to cause you a whole load of hassle.

You’ll need to find out which pound it’s been taken to. If you’ve been given a notice of impoundment, the details will be there – otherwise, you can call NSL on 0343 224 1999 to find out.

Then you’ll need to go along to the pound, which is usually on the edge of any town. At the pound, you’ll need to provide various documents, including:

Valid photo ID, eg a driving licence or passport.
Proof of ownership. This is usually your V5C certificate, but could also be the V5C/10 new keeper supplement with a recent bill of sale.
A valid MOT, or proof that you have an MOT booked.
A valid insurance certificate. If you’re not covered, get in contact with the Insurance Factory to arrange insurance for compounded cars.

If you’re collecting on behalf of someone else, you will also need a signed letter authorising you to do so, plus a copy of the owner’s driving licence or passport.

It’s worth double checking with the pound before you set off to make sure you’ve got all the documents they require.

You’ll also need a method of payment, such as a bank card.

What are the release fees for impounded vehicles?

Once your car’s been taken to the pound, the fees and fines quickly mount up.

As of 2022, they include:

A £200 impound release fee.
A £21 per day storage fee.
A surety fee if the keeper has not taxed the vehicle before it’s released. This is £160 for motorcycles, cars, and light goods vehicles; £330 for buses, recovery, haulage and goods vehicles; and £700 for heavy goods vehicles and large buses. If proof of vehicle tax is provided within 14 days, this fee will be refunded.
A £25 fee if a V62 form is supplied for a new keeper. This enables you to apply for an official V5C registration certificate, or log book.
Any outstanding fines.

You can pay the above in person, over the phone, or online.

You might also need to factor in the cost of insurance for compounded cars, as many regular policies won’t cover you in this scenario. At the Insurance Factory, we can arrange policies to cover you for 30 days, giving you time to drive your vehicle away from the pound, then put your affairs in order.

What if I don’t claim my car?

Your vehicle will be stored at the pound for between one and two weeks. After this point, the authorities can choose how to dispose of it.

If it’s an older or unroadworthy vehicle, they may send it for scrap. If it still has some value, they could well put it up for auction, and you will be entitled to any proceeds made from the sale.

However, even after the car has been disposed of, you may still be liable for certain outstanding fees and fines. These will be subtracted from any profits from the sale.

How do I pay my VED?

Fortunately, you can avoid all the above hassle and cost by simply going online to the government’s vehicle tax page, or popping into the post office.

To pay your tax, you’ll need a reference number from either a recent reminder letter from the DVLA, your vehicle log book, or the green ‘new keeper’ slip from a log book of a vehicle that you’ve just bought.

If you choose the direct debit option, you can pay annually, monthly, or every six months, though you will have to pay a surcharge.

Direct debit payments will be taken automatically each year, so you don’t risk forgetting and incurring any of the penalties listed above.

How much is VED?

The rate varies depending on when your car was first registered, and what emissions it produces.

It’s a complex system, so the quickest way to find out is to use the government’s vehicle enquiry service. You’ll need the number plate, plus the 11-digit reference number from the log book (officially called the V5C registration certificate) to find the tax rate for a particular vehicle.

What vehicles are exempt from tax?

All vehicles must be taxed – but in some cases, it’s free to do so. The following categories are “exempt” from vehicle tax:

Electric or zero emission vehicles. Along with cheap running costs and environmental benefits, electric cars are free to tax. The electricity must come from an external source or a battery that’s not connected to power when the vehicle is moving.
That means that hybrid vehicles are not exempt (though tax rates for these are generally low).
Vehicles driven by people in receipt of certain disability benefits. Vehicles used by organisations to transport disabled people are also exempt, as are mobility scooters.
Historic vehicles. Got a classic motor that’s more than 40 years old? You won’t have to pay a penny in road tax.
Agricultural vehicles. If they’re driven off-road, with very limited on-road usage, they’re exempt from VED.

But in all the above cases, don’t forget to apply for your free tax, or you could see your vehicle seized. You’ll have to pay penalties and fees to get it released, and may need to obtain insurance for compounded cars.

What about foreign registered vehicles?

If you’re a non-resident of the UK and your vehicle is registered abroad, you don’t need to pay VED on short trips to this country. Check local tax and licensing laws where you live.

However, if you normally reside in the UK, or are planning on visiting for six months or more, you’ll probably need to re-register your foreign car and start paying road tax here.

Check for more details about importing vehicles.

What about driving to my MOT?

There is another, very short-term exemption: getting your vehicle to a garage for an MOT test. This is because it’s impossible to tax a vehicle that hasn’t got a valid MOT certificate.

If this applies to you, you’ll need to book an MOT test at a nearby garage, and drive straight there without making stops en route. If the police pull you over, they won’t be impressed unless you can prove that you have a valid reason for driving an untaxed vehicle.

Is the insurance valid on untaxed vehicles?

Car insurance policies will include a clause stating that you must keep your vehicle taxed, in good repair, and with a valid MOT certificate.

If you need to make a claim on an untaxed vehicle, you might find it’s rejected – this varies between providers. For example, some might pay out to a third party for damage, but not to the policy holder.

If you’re convicted of failing to pay road tax, this is a criminal offence. If you have an existing insurance policy, some providers may cancel it. Others will refuse to cover you in the future or will charge you higher premiums. This is because they see you as more of a risk, and therefore more likely to require a payout in the future.

Of course, driving a car without insurance is a whole new motoring offence. You could well be stopped by police, and might have your vehicle seized. If this happens to you, give us a ring.

We’ll help reunite you with your vehicle by arranging insurance for compounded cars, getting you back safely and legally on the road.

What does SORN mean?

SORN stands for Statutory Off Road Notice. It means that you never use or park your vehicle on any public road, and are therefore not liable to pay VED.

You might register your vehicle as off-road for a while if, for example: it’s a classic car that you are restoring in a garage; a motorhome that you store on private land over winter and use only in the summer; or a vehicle you are keeping on your driveway until your teenager has passed their driving test.

Just remember to get it taxed, insured and through the MOT before you take it out on public roads. Otherwise, it could be spotted by DVLA enforcement teams, leading to a whole load of trouble. However, we will be on hand to arrange insurance for compounded cars, helping you get back on the right side of the law.

You can’t apply for a SORN if you park your vehicle on the street but don’t drive it anywhere. That still counts as using a public road, and you could be clamped and fined.

But you can transport it on a breakdown truck. So if you need to get a vehicle covered by a SORN to a new owner, that’s one possibility.

Can I cancel my vehicle tax?

To cancel your VED, you’ll need to give a reason why you no longer have to pay. The government website lists which reasons are valid, including:

You’ve sold or transferred the vehicle to someone else;
You’ve taken it off the road (SORN);
It’s been written off by your insurance company, scrapped, or stolen;
It’s been exported out of the UK;
It’s been registered as exempt, for example, you have started receiving eligible disability benefits.

Once you’ve informed the DVLA of this change, your direct debit will be cancelled and you’ll automatically be refunded for any full months remaining.

It used to be that if you sold your vehicle, you could transfer the tax to the new owner – but this is no longer the case.

So if you buy a secondhand car, make sure you tax it promptly to avoid incurring penalties. Otherwise, you risk it being seized and impounded. If this happens to you, contact us to arrange insurance for compounded cars.

A word of warning: there have been various car tax scams around in recent years. One common one is a text promising you a refund on your VED. If you follow the link included, you’ll be taken to a fake website, where you’ll be asked for personal details and your bank account.

Don’t fall for this con trick – report it to Action Fraud.

Get a quote from Insurance Factory today

Taxing a car is simple. But if you forget, or get it wrong, then it can be quite a hassle to get back legally on the road again.

We arrange insurance for compounded cars, which provides you with the cover you need to drive your vehicle back home. That gives you 30 days’ breathing space, which you can use to get your affairs and paperwork in order.

Contact us for a quote.

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