Road Transport – Operator Licensing and entities

Posted by Jonny on Oct 30, 2016 in Latest News |
John Dyne

John Dyne,  Director

If you are operating HGVs then you need an operator licence and to get a licence you have to fill in an application form called a GV79. For many established operators this is an application that was probably made many years ago. But what needs to be remembered is that the application contains a number of undertakings and a declaration that the statements made in the application are true. These undertakings are promises and are the same for both restricted and standard operators. These are promises the operator makes to the Traffic Commissioner and if they are broken then it undermines trust and confidence in the operator and can lead to sanctions such as suspension or curtailment of the licence or even revocation.

The operator licence is a valuable asset without which the haulage business cannot exist and profits cannot be made whether you are using vehicles to deliver your own goods or goods on behalf of others. It must never be a case of “obtain the licence then file and forget”. It pays to periodically  review the licence to ensure all the details are up to date and to consider taking legal advice if in any doubt.

One of the promises made in the application is that the traffic commissioner will be notified within 28 days of any changes to the business including changes to a Limited Company status or partnership such as changes in the named directors or partners.

A common issue is that of change in entity. That is when the legal person or entity that originally applied for the licence alters at some point in the future. To explain:  if a licence is granted to Mr Smith who is a sole trade it is Mr Smith who holds the licence and has authority to operate the heavy goods vehicles. If Mr Smith takes on a partner and becomes Smith & Co then the business operating the vehicles is no longer Mr Smith’s sole trade but the new Partnership. Equally if Mr Smith incorporates the business and trades as a company then the business operating the vehicles is no longer Mr Smith but the company. In each case after the change the licence is held by the wrong entity. The original licence holder (i.e. Mr Smith as a sole trader)  is no longer operating the vehicles but is in essence lending his licence to another entity (i.e. the partnership or company) which is illegal. This means, in my given examples that neither the partnership nor the company are authorised to operate the vehicles and a criminal offence is committed each and every time the vehicles are used on the road. Of course these are clear cut examples – sometimes the overall picture is a little fuzzy and in such cases you should seek advice as to whether or not you need to take action.

The solution to this problem (when it genuinely arises) is actually very simple. The partnership or the company must apply for a new licence in their own right. The counsel of perfection would be for this application to be made well in advance of the proposed changes but in most cases the entity issue I have described only comes to light well after the entity change has taken place. Some operators may feel inclined to let sleeping dogs lie or not to rock the boat but that is the wrong call. The right thing to do is to put in an application in the name of the new entity and in most cases the Office of the Traffic Commissioner will simply process the application under what is termed the Schedule 4 procedure. Although pending issue of the new licence the new entity may be trading without the authority of a licence the Traffic Commissioners are not likely to take any action because they will recognise this was an oversight and steps have been taken to rectify the situation. This entity issue is more common than you might think but it is something you should check or be aware of should the way in which the business is structured change in any way.

Other changes that need to be reported include where you change your maintenance arrangements or your operating centre. In the case of maintenance arrangements, it is just a case of updating the Office of the Traffic Commissioner and for example providing details of the new maintenance contractor and a copy of the new maintenance agreement. In the case of a change in Operating Centre or addition of a new Operating Centre to your licence this will require an application on form GV81.

If you are affected by any of the issues raised in this publication then please do not hesitate to contact us in complete confidence.

Reply

Copyright © 2019 Solicitors 4 Transport. All Rights Reserved.
Theme by Lorelei Web Design.