Capita wins £100m car tax deal

The Driver and Vehicle Licensing Agency (DVLA) has signed a five-year £100m contract with IT services group Capita to help it crack down on tax and insurance avoidance.

Capita will provide a national car tax and insurance enforcement service from 7 November 2011.

The company will be charged with tracking each vehicle in the UK for tax and insurance purposes. But alongside the IT services that support such activities, Capita will also manage enforcement notifications, as well as clamping and impounding – and even selling – untaxed or uninsured cars.

"Capita has put forward an innovative proposal to support the DVLA in its commitment to reduce vehicle tax and insurance evasion and offers the best value for money," said Simon Tse, DVLA's chief executive.

The work was previously carried out by traffic services firm NSL. The selection of Capita highlights how business process outsoucing firms are re-inventing the types of services they can provide to public sector organisations, said John O’Brien, research director at TechMarketView.

"[Capita] will generate the majority of its business from fines and charges and by proceeds from the sale of vehicles," he added.

Whether such approaches will prove lucrative for the supplier remains to be seen. The DVLA has previously boasted about the low levels of car tax avoidance, which it said had fallen markedly as a result of the deployment of a network of automatic number plate recogition cameras across the UK. It claimed to have collected 98.5 per cent of all potential revenue from car tax in 2007.

Up to 300 staff are expected to transfer to Capita as part of the new deal.