Private hire taxi firms are being urged to seek advice as customs officers prepare to crackdown on tax evasion.

A new team has been set up at Customs and Excise to unearth firms who do not declare themselves eligible to pay VAT.

Now officers are offering honest business people the opportunity to find out whether their books are in order.

Peter Lagowski, leader of the shadow economy team, said: "We just want people to be registered and paying tax. We don't want to crack down so hard that people go out of business.

"It's better for people to put their hands up now than come out kicking and screaming. We are more sympathetic to those who volunteer than those who try and hide."

The crackdown is not targeting self-employed drivers. It is more concerned with private-hire operators back at base who take the calls and send drivers out.

Most drivers pay a fee of about £60 to £75 a week for the privilege of being linked to an operator. If the operator has about 15 to 20 drivers it is quite possible the total income will be over £50,000 a year and this is when they need to start paying VAT.

The team, which covers a large part of the North of England, has been targeting each town in turn.

They found registered 25 private-hire operators in Leeds and four in Sunderland. Bradford is next and the problem is anticipated as "vast".

Mr Lagowski said: "It's a huge problem, particularly the cash sector."

The crackdown on the shadow economy, which involves all trades rather than just private-hire firms, started as a pilot scheme elsewhere in Britain in 1996/7 and was set up in Bradford last year. Any firms wanting advice should telephone (0113) 2304466.

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