Up to 17,000 people working in the animal welfare sector, including dog and cat breeders and sellers, may soon need to register with HMRC to renew their licences.

HMRC’s recent 12-week consultation explored expanding tax conditionality rules to include breeders, boarding establishments and pet sellers. These rules, already in place for taxi drivers and scrap metal dealers, require individuals to confirm tax registration before renewing their licences. A government response is expected later this year.

The consultation examined wider tax compliance across the hidden economy, targeting sectors where cash payments and unregistered activities are common. It also covered the waste sector and gig economy workers. If implemented, the new rules could affect up to 500,000 waste-licence holders, 300,000 taxi drivers and between 200 and 900 London pedicab riders.

The University of Leeds estimates there are now 13m dogs in the UK – 4m more than previously thought – highlighting the demand for breeders and related services. The government sees tax conditionality as a way to improve compliance and raise an estimated £260m in additional revenue.

Once registered, affected individuals only need to renew their tax registration every three years. However, HMRC expects the changes to add £700,000 in annual administrative costs.

The hidden economy tax gap was estimated at £2.2bn in 2022/23, making this a key area for government intervention.

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