A recent Upper Tribunal case considered the position of evidence of financial standing. The Upper Tribunal allowed an appeal, overturning the Traffic Commissioner’s decision to revoke a haulage operator’s licence due to alleged lack of financial standing.
The case involved Parks Haulage Ltd, which had its licence revoked for insufficient financial standing. The company was exempt from audited accounts.
The licence was granted on 28 October 2019 for four vehicles, requiring £21,500 financial standing.
The company faced public inquiries in 2022 and 2024 due to maintenance and financial concerns.
The Traffic Commissioner initially issued warnings and undertakings, including a requirement for bank statements showing at least £21,500 over three months.
Multiple extensions of the period of grace were granted, but ultimately, the licence was revoked on 28 November 2024 due to a shortfall in bank account averages (£11,667 vs. required £21,500).
Financial evidence, including unaudited accounts showing shareholder funds of £135,646.00, had been served on the traffic commissioner.
The operator argued that the Traffic Commissioner had failed to consider unaudited accounts and shareholder funds, relying solely on the bank statements for his decision. The operator submitted that accounts showing £135,646 in shareholder funds should be considered as evidence of financial standing.
The Upper Tribunal confirmed that reliance on bank statements over time is a reliable indicator of available finance. However, other financial evidence, such as unaudited accounts, can be considered and weighed appropriately.
The Upper Tribunal concluded that the traffic commissioner in the case had erred by completely disregarding the unaudited accounts rather than analysing their value. The accounts indicated a capital and reserves figure of £262,951, which was above the required financial threshold. The Upper Tribunal set aside the traffic commissioner’s revocation of the licence.
What does this mean for Operators?
It highlights the importance of seeking advice if you are struggling to meet financial standing. There are many types of evidence which can be relied upon, and, with the right guidance, you may be able to convince the traffic commissioner not to revoke your licence despite it appearing that you do not have enough ‘cash in the bank’. The case also acts as a reminder of the need to engage with the OTC, request periods of grace and ask for extensions, rather than hoping the problem will go away.
Our specialist team can support you with compliance awareness so that you do not get caught out by changes. Contact Jared Dunbar today for help.