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O-licence continuation fees: clarity needed on deadlines

  • 15 May 2014
  • By Chris Tindall

Traffic commissioners and the DVSA are overhauling their guidance to operators on continuation fees for licences after the upper tribunal found that the current wording is confusing.

The issue came to light during an appeal earlier this year by standard international goods vehicle operator Overbrook Recovery Services. Its licence was terminated by the Office of the Traffic Commissioner (OTC ) after the continuation fee was not received by the deadline. Shortly afterwards, Overbrook wrote to the OTC , requesting that the licence be reinstated  because it was under the impression it had not yet expired.

The matter eventually came before the traffic commissioner (TC ) and it was decided that the automatic termination must stand.

Renewal dates
Central to the issue was which date both sides were relying on to determine when the licence needed to be renewed. Overbrook’s nominated transport manager Katie Griffiths was relying on the date given on the operator’s licence; known as the “review date”.

However, the OTC said this was incorrect and the operator should instead have relied on the “pay-by-date”, also known as the “prescribed time”, which is not provided on the licence. This latter date is defined in the Goods Vehicles (Licensing of Operators) (Fees) Regulations 1995 as : “…before the end of the month that precedes the date of expiry of a period of five years beginning with the date of either the issuing of the licence or the most recent five-year anniversary of that date, whichever is the later”.

This sounds complicated, but as judge Michael Brodrick explained in his upper tribunal decision, the easiest way to approach this definition is to begin by considering the date on which the licence was issued. The first continuation fee must be paid by the end of the month immediately before the month in which the fifth anniversary of the start of the licence occurs.

30-day discrepancy
Problems occur because the aforementioned dates can differ by as much as 30 days; with the review date being a reference to the TCs’ powers to undertake a periodic review of the operating centres specified on licences and the prescribed time being the final deadline to pay the continuation fee.

Christabel Hallas, a specialist transport lawyer, says: “The fact that the licence document makes no reference to the date for the fee request being different from the review date can lead to confusion with operators diarising the wrong date. In most cases, the operator will receive a request for payment of the renewal fee well in advance of the date by which the fee has to be paid. However, if for any reason the request is lost in the post or the person responsible for paying the fee is on leave, then, if they have relied on using the date on the operator’s licence, they will have missed the deadline and the licence will no longer be in force.”

Greatest risk
She adds: “I think that operators who are coming up to their first five-yearly renewal are at the greatest risk. Those who have already paid the renewal fee once will have been advised of the relevant fee request date and so will be able to diarise this five years hence.

“This is the first occasion on which the tribunal has been pointed to the actual wording on the operator’s licence. Operators could potentially lose their licence if they don’t realise that the two dates are different.”

In Overbrook’s case, Brodrick concluded that “the appellant’s confusion between the review date and the pay-by date does amount to an exceptional circumstance which justifies disregarding the automatic termination of the licence”.

He allowed the appeal, but he also urged the DVSA to remove or revise its guidance on continuation fees, which he described as simply wrong and likely to mislead operators about when to pay their fees.

Following the tribunal, DVSA told CM it was doing just that and was working with TCs “to see what can be done to simplify and clarify the situation regarding termination and renewal of licences to reduce the burden on the industry”.

Further information: the STC’s statutory document on case management can be found here.

Fee summary
The senior traffic commissioner’s statutory document on case management (see further information above) sets out the  procedures that TCs and their staff should follow when dealing with requests to consider late payments.

It is important for operators to understand that there is no legal requirement for TCs to issue reminders. Instead, companies should ensure they know exactly when they must pay their continuation fee by, especially if it is their first one. However, the OTC says that if an operator has elected to receive correspondence electronically they will receive notification through the self-service system.

An OTC spokesman says: “The checklist acts as a reminder to operators that their continuation fees are due and gives notice of the timescales for payment. It is incumbent on the operator to have proper procedures in place to ensure timely payment of all fees.”

However, it seems TCs have taken on board the recent comments made by the judge in the upper tribunal. The OTC  spokesman adds: “To make the processes as simple as possible, TCs are reviewing their guidance to operators on licence continuations and will advise operators and the industry in due course. In the meantime, they would advise operators to call the Contact Centre (0300 123 9000) if they have any queries about the licence continuation date.”

The spokesman says if a late payment is not accepted and the operator wishes to continue running CVs then it must apply for a new licence.

Transport lawyer Christabel Hallas says: “It would be prudent for operators to now check that they have diarised the correct date and to allow sufficient leeway for payment of the fee. I have not had any clients who have been caught out by this anomaly, but there have been numerous cases at the upper tribunal appealing termination of a licence.”

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