Annex 1
FLAGGING OUT
Since Budget 1999 FTA has dealt with enquiries
from members whose activities spanned the entire sphere of truck
operations, including owner drivers with tippers, removal companies,
domestic and international general hauliers, bakeries, milk distributors
and many others. Enquiries were not limited to the south and east
of England but, from throughout England, Wales and Scotland.
The attractions of cheaper fuel in the Republic
of Ireland, over a land border, made it appropriate for Northern
Ireland companies to approach the authorities in the south with
a view to setting up new businesses.
A lack of clear legal advice from the DETR made
it difficult for operators to decide just what was within the
law. Traffic Area offices had established procedures allowing
a foreign registered and taxed vehicle to be operated under the
terms of a UK issued operator's licence. But FTA investigations
outside of "O" licence legislation and focussed on European
directives seemed to suggest that such an operation could contravene
EU law and indicated that an operator should register, tax and
hold the operator licence (or its equivalent Community Authorisation)
all in the same member state. Furthermore, this work indicated
that the rules required vehicles to be involved in international
journeys in order to meet the restriction of only being in a visited
member state (ie the UK) on a temporary basis.
These interpretations were reinforced by findings
of the legal Counsel appointed by FTA.
Adding these legal uncertainties to the sheer
complexity of setting up a business abroad, lack of available
management time, information and contacts certainly became enough
to deter most enquirers.
Thus, in order to legally set up abroad a business
is required to be an international operation, with a permanent,
significant presence in the adopted new state, meeting local residential
and fiscal requirements.
Operators are also warned that government authorities
may change the rules. In Holland, long regarded as a haven for
would-be "flaggers out", some licences granted to operators
covered by Dutch entrepreneurs have been revoked. In the Irish
Republic requirements of residency and permanence are now much
more rigorously enforced than before. Meanwhile, the Vehicle Inspectorate
in the UK expects that cases deriving from problems with "flagged
out" vehicles will be forthcoming.
In summary, flagging out can offer a lifeline
to struggling transport operators, but the appropriate operating
circumstances have to be in place: one cannot mix and match the
legislation in different member states. FTA suggests that it is
not really surprising that most companies gave up pursuing the
policy some time ago.
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