Issues around the end of the tax disc rumble on

This NEWS item reproduces a report in the recent newsletter from the Federation of British Historic Vehicle Clubs (FBHVC).

Posted: 150410

The issues around the end of the tax disc rumble on, not the fact of its removal, with which it is impossible to argue, but some of the consequences. There are two issues and one related matter.

The first issue
concerns re-taxing at the time of transfer in a private sale. We (the FBHVC) always try to give our members a clear steer as to the law which applies to them on any point. However the official advice from DVLA regarding the position on Vehicle Excise Duty (VED) when a vehicle is sold makes that difficult in this instance.

DVLA have consistently said, and we have duly reported to you, that even if the vehicle is taxed on the date of sale, the sale causes that licence to lapse, a rebate is due to the seller and the buyer must himself tax the vehicle before he uses it. They have said there is no 'grace period'. They point out that there are rapid ways of achieving this, whether online or by phone or at a Post Office. This advice is entirely correct for sales by motor traders or when the vehicle is not currently taxed or is on SORN.

We have looked long and hard at the law regarding this point and come to the conclusion that, in respect of most
sales between private individuals, this advice from DVLA is not actually correct. Our understanding of the legal position has been independently confirmed.

If the vehicle is taxed at the time of sale, then the law (it is the Vehicle Registration and Excise Act 1994 as amended) says the VED will lapse when the vehicle is sold and the DVLA is notified of that fact. The only way the DVLA can be notified is by the existing Registered Keeper (the seller) posting the actual V5C to DVLA in Swansea. A private individual cannot do that electronically or by phone, the paper document must be sent. It is also clear that the seller's right to a refund does not arise before the V5C is in the hands of DVLA. Until then the licence is in force.

Now any wise buyer should assume the person who sells him the vehicle and hands him the V5C/2 will immediately put the V5C in the post. That is the legal requirement, and the seller will have a rebate to protect. But we think it is absolutely fair to say that where the vehicle is taxed at the time of sale and the seller is a private individual, a buyer cannot legally be obliged to apply for new VED until the V5C has arrived in Swansea, and that cannot be until the earliest time it could be delivered there by first class post. This could solve the problem of the evening or Sunday purchase, in respect of which the Post Office option, which some members would need to use, was never available, and also save taxing a vehicle which is to be immediately exported or for which SORN will immediately be declared, perhaps because it is heading for restoration.

There are unlikely to be any consequences from acting upon our advice, as of course if a vehicle in the situation described is seen on the road, the DVLA database if checked will show it as taxed. Of course, if a buyer is able and wishes to comply with the DVLA advice and apply to tax the vehicle immediately online or by phone before driving the vehicle away there is no reason not to do so.

The second issue, dealt with more fully by Ian Edmunds in the DVLA section of this Newsletter, is the current state of the DVLA Vehicle Enquiry System (VES). It seems to the Federation that now the tax disc has been discontinued, the VES becomes a primary document of record and everyone who has a taxed vehicle is entitled to be able to rely on it to demonstrate the vehicle VED status to anyone who has a need to know it. That might be friends borrowing the vehicle, repairers who need to drive the vehicle for testing or, perhaps more importantly, various officials at home and abroad. We know that is not currently the case for a significant number of historic vehicles. We understand the long history of why some VES data is unsound, but we will be continuing to pressure the DVLA to bring it to a satisfactory state, if necessary with our help.

Unintended consequence. The DVLA approach does enable someone, who has never possessed the whole paper V5C, to obtain tax in respect of a vehicle, simply by reason of knowing the reference of the V5C of the vehicle. This is not a very secure process. Thus we have been concerned to learn that that DVLA has come to an arrangement whereby in the case of certain fleet users the V5C paper document may not need to exist.

The Federation fully understands the reasons for this, to avoid administrative complexity, but we will be monitoring any suggestion to further limit the need for a paper V5C. While we have always known that the V5C is the record of the Registered Keeper and is not a document of ownership, it is a document of record, at the very least of who has the right to a vehicle bearing a specific registration mark. This has been important in not a few cases concerning historic vehicles. Before that record is turned into a single digital record held by DVLA we will wish to see it be accorded the high level of security it requires.