The scrapping of the paper tax disc in favour of a digital solution has caused a £200m fall in tax takings in the first six months, new figures show.
Official figures obtained by the Financial Times revealed that the Driver and Vehicle Licensing Agency (DVLA) collected £2.7bn in vehicle tax between October 2014 and March 2015, £223m less than in the same period a year earlier.
The switch away from a paper disc, which was first issued in 1921, to an online system in 2014, cost £1m and the Government financial watchdog claimed at the time there would be no “material increase in lost revenue”.
The total figures for the year to March this year are expected to be published after the EU referendum on 23 June.
The National Audit Office said the change-over “has likely contributed to an initial increase in reported levels of non-payment, which has led to additional compliance and enforcement activity.”
Local authorities are now using a network of cameras linked to a database to work out which vehicles are being driven illegally.
Oliver Morley, DVLA chief executive, said: “Almost 99% of all vehicles on the road are correctly taxed: that’s around £6bn in vehicle tax passed to the Treasury every year.
“We write to every registered vehicle keeper in the UK to remind the when their tax is due and we have introduced a range of measures to make vehicle tax easy to pay.
“At the same time we are taking action against those who are determined to break the law.”
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