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Playing with fire

8th March 2012, Page 20
8th March 2012
Page 20
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Page 20, 8th March 2012 — Playing with fire
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Which of the following most accurately describes the problem?

Keywords : Business / Finance

A new opportunity can tempt the unscrupulous to borrow an O-licence but the risk just isn’t worth it

Words: Lucy Wood and Anton Balkitis Ever found yourself tempted to ‘borrow’ a space on someone else’s O-licence? It’s important that you know the risk you take in borrowing or lending a disc – the damage to your repute if you are caught can be irreparable, particularly if it appears that you did so knowing what you were doing was wrong.

There are many reasons operators give in to that temptation, yet few appear to realise the seriousness of their actions until it’s too late. If the authorities ind out, operators not only face criminal prosecution, but are likely to be hauled before the trafic commissioner (TC) where their licence will be revoked or any application denied unless they have a very good explanation.

The temptation is, perhaps, greater than ever in the current inancial climate. Many businesses are struggling and are concerned they might not be able to meet the inancial standing required to be granted authorisation for the vehicles they need. They think that borrowing a disc from someone else is an easier option. The inancial standing minimum requirements are there to ensure that the holder of an O-licence has the inancial resources available to keep its vehicles safe to use on public roads, so other road users are not put at risk. They also ensure that the operator can compete fairly with others within the constraints of the regulatory regime. The legislation is fairly restrictive, and a TC must revoke a licence if the operator does not have the required inancial standing.

It is apparent from the recently published senior TC’s statutory guidance and statutory directions that TCs are well aware of the dificulties in which operators are inding themselves. TCs try to be as lexible as the rules allow to make it possible for operators to demonstrate inancial standing, but it must be remembered that they are bound by the legislation, even if they are trying to interpret it as widely as possible.

Another scenario is where operators are offered new or additional work at short notice. They often ind themselves facing the decision of whether to borrow a licence disc from a fellow operator pending the grant of their variation application or risk losing the opportunity of valuable work. This is an extremely risky decision for both operators concerned. Unfortunately, there are plenty of operators who do not help themselves and fail to plan ahead. All too often, they set up a new business, buy the vehicles, sign a contract and presume that an O-licence is a mere formality that can be obtained almost immediately. This is far from true.

It doesn’t help that the timescale to determine an application is uncertain, to say the least. Whether as a result of government cutbacks, the centralisation of the licensing system, the need to obtain more detailed information from operators, or for other reasons, the time it takes for licence applications to be processed has increased signiicantly over the past few years. A few years ago an interim licence could be obtained within days. Now it is not unusual for it to take months.

Another scenario that is all too common is that of a new company operating on the discs of a company that has gone into liquidation. Although the directors of the new company may be the same as the old one and the names of the companies may be identical, this does not make it legal. The new company is an entirely separate legal entity, which means that it requires its own new O-licence.

Interim hearings

Few would suggest that the current system is wholly satisfactory. But if you have applied for a licence and things are taking longer than they should, it is possible to ask for an interim hearing before a TC, which can help speed things along. However, an interim licence is not guaranteed.

The usual allegations faced by operators involved in the lending/borrowing of licences are using a vehicle without an O-licence and the more serious offence of using or lending an O-licence disc or other document with intent to deceive. While unauthorised use carries a maximum penalty of £5,000, the more serious offence can result in up to two years’ imprisonment and an unlimited ine. Therefore you’re not just risking your money and your licence; you’re risking your freedom.

If you’re tempted to borrow or lend out a vehicle disc, remember that the O-licensing system is based on trust and co-operation. Once that trust is lost, it’s extremely dificult to regain it. ■ • Contact transport lawyers Lucy Wood or Anton Balkitis at Rothera Dowson on 0115 910 0600 or visit www.keepmeontheroad.co.uk

PLAN AHEAD

Operators can avoid problems if they’d only plan ahead. If you know you’re setting up a new company to operate vehicles, apply for a licence for the new company as soon as you have the new company registration number. It’s also important to retain an adequate margin on your licence at all times. Therefore, if you usually only operate 10 vehicles, for example, but from time to time are offered additional work at short notice, you’ll need to apply for authorisation for an additional two or three to cover those periods. Many operators still mistakenly believe that they can hire in vehicles in excess of their total authorisation, which is also incorrect.

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