The Scottish Government

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5.0 Legislation

5.1 Legislation aims to protect the people's interests and ensure that services can operate in an orderly manner. Since the flexibility needed from DRT varies according to its market, the legislation needs to reflect the different types of DRT.

Taxi, Private Hire, Public Service Vehicle or Community Transport
Choosing the wrong legislation for a DRT service can be costly. Unlike PSV operation, taxi services cannot claim their fuel duty rebate through Bus Service Operators Grant.

5.2 Some DRT involves only limited flexibility e.g. a flexible portion of bus route for restricted hours in the day. In these cases, the existing flexibility in Public Service Vehicle ( PSV) legislation can protect the interests of all parties. However a completely different set of parameters is needed for a volunteer car driver using their own car to provide a service. As a result of the different routes by which DRT services have developed, and can now be operated, there are many potential legislative routes.

5.3 Given the complexity of the choices for providers, there have been many problems with interpretation and application of the legislation relating to DRT services. This guidance has been developed in conjunction with the Scottish Traffic Area Office to help planners of DRT select the optimum legislation.

5.4 Table 5.1 summarises the legislation currently being used to provide DRT services in Scotland. The abbreviations used in the Table for the relevant legislation are:

• S19 - Section 19 permits under the 1985 Transport Act can be issued to organisations concerned with education, religion, recreation, social welfare and other activities of community benefit but only entitles them to carry a defined population (not the general public). The defined population can include those in a geographical area who do not have access to their own private transport.
• S22 - Section 22 permits issued under the 1985 Transport Act are granted for non-profit groups that use unpaid volunteer drivers, to enable them to operate registered bus services for the public using a minibus.
• S1(4) car sharing - Section 1(4) of the 1981 Public Passenger Vehicles Act 1981 allows not for profit contributions to vehicle running costs to be accepted by drivers without bringing this within PSV or taxi licensing. This is the legal basis for social car schemes, ambulance car services, some other community transport activities and is the common basis for small vehicle dial-a-ride operations for people with disabilities.
• Taxi and private hire car sharing - Provisions in the Transport Act 1985 allow operators to offer sharing of private hire cars and taxis licensed by local authorities under the Civic Government (Scotland) Act 1982, at the time of advance booking.
• PSV "O" Licence - Public Service Vehicle ( PSV) Operator Licences can be issued to authorise the operation of regular services on fixed routes with flexible sections as well as totally demand responsive services. Less onerous restricted and special restricted licences can be issued to certain minibus and taxi operators.
• Unlicensed operation - This applies where no charge is made, directly or indirectly, for the service, and therefore no 'hire or reward' exists, which is the criterion that triggers regulation under the systems in operation within the UK. This applies commonly to social work and home to school transport operated local authorities, and to non-emergency transport operated by the Scottish Ambulance Service. In addition, local authorities can use their own school buses to operate 'local services' ( i.e. registered local bus services) without a licence under S46 of the 1981 Public Passenger Vehicles Act 1981.

5.5 For more detailed guidance and application forms for PSV operation and Section 19 and 22 Permits see www.vosa.gov.uk . For further information and advice about car-sharing and Section 19 and 22 Permits see www.communitytransport.com .

Table 5.1 Options for Licensing DRT Services

Bus Service Operators Grant

5.6 Area based demand responsive bus services, or flexible route sections of otherwise fixed routes registered in Scotland are not eligible for Bus Service Operator Grant ( BSOG formerly Fuel Duty Rebate). This means that if a fixed route service is to be replaced with a DRT service then it is important to specify as much 'fixity' as possible when registering the service to ensure that BSOG can be claimed for the fixed sections to make the DRT service competitive with the fixed route option.

5.7 Taxibus (Restricted PSV) services, are registered as local bus services and are therefore eligible for BSOG on the same basis as PSV services ( i.e. for the fixed route sections only). The same applies to Section 22 services. BSOG is also available for Section 19 services but only when carrying certain groups of passengers. However car share, shared taxis and private hire cars are not eligible for BSOG.

VAT and DRT services

5.8 VAT is currently zero rated for vehicles designed to carry nine passengers or more (in addition to the driver), although there are specific exceptions in relation to vehicles for disabled people and Post Office vehicles (see www.hmrc.gov.uk - VAT Notice 744A). If smaller vehicles ( e.g. taxibuses) are to be used for DRT as part of public transport networks then the need to charge VAT to passengers may affect costs, or fare levels, and this needs to be allowed for in any comparisons with larger vehicle operation. Of course, many voluntary organisations, and smaller taxi and private hire operators are not registered for VAT at all because their turnover is below the mandatory threshold. This will also affect operating costs, as, unlike VAT registered operations, they will be unable to reclaim the VAT they pay out on the vehicle, fuel and other non-labour costs.

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