Buying an existing taxi or private hire firm: what to check

Buying a firm that already has drivers, account customers and a phone that rings can be quicker than starting from nothing. It can also leave you with a licence you can't use, drivers who walk, or a tax bill from before your time. Here's what to check, in order, before you agree a price.

Can you take over a taxi firm's operator licence?

Not directly. Section 55 of the Local Government (Miscellaneous Provisions) Act 1976 grants an operator's licence to the person who applied, once the council is satisfied that person is fit and proper, and the Act has no procedure for handing it to someone else.

Vehicles are different. Section 49 of the same Act deals with a licensed car changing hands: the owner must tell the council in writing within 14 days, with the new owner's name and address, and failing to do so without a reasonable excuse is an offence. Hertsmere Borough Council notes that a vehicle licence is granted for a particular car, and councils charge for the change of owner. Hertsmere's transfer fee is £99, Manchester's £77 and Torbay's £76.

Driver licences stay with each driver, because section 51 grants them to the person who applied.

So it matters who holds the licence:

• A sole trader holds it personally. When he sells, his licence doesn't come with the business, and you need your own before you take a single booking.
• A limited company holds it as the company. Buy the company's shares and the company keeps its licence. The Statutory Taxi and Private Hire Vehicle Standards ask councils to apply the fit and proper test to each director and to require operators to report any change of directors, so the council will look at you.

Talk to the council's licensing team before you sign anything. GOV.UK also says the driver, vehicle and operator licences all have to come from the same authority, so a firm licensed by one council can't simply move its drivers onto your licence somewhere else. Our guide to the private hire operator licence covers a fresh application.

Should you buy the shares or the assets?

To buy a taxi firm, you either buy the company (a share purchase) or buy the things it owns (an asset purchase). Your solicitor will steer this, but know the trade-offs before the first meeting.

On TUPE, GOV.UK says that when a business or part of one moves from one employer to another, the employees' jobs usually transfer, their terms and conditions go with them and their continuity of employment is kept.

On VAT in an asset purchase, HMRC's Notice 700/9 says a transfer of a going concern isn't treated as a supply for VAT. The assets must be capable of running as a business in their own right, you must use them to carry on the same kind of business, the seller must be VAT registered and you must be, or become, a taxable person. HMRC says the rules are mandatory, so settle whether the sale is one at the start.

What should you check in the accounts and tax?

Start with what's free. Companies House shows a company's registered address and date of incorporation, current and resigned officers, filed documents including accounts, charges, previous names and insolvency information, and you can set up free email alerts for changes.

Then ask the seller for what isn't public. This is the due diligence that sets the price:

1. Management accounts and bank statements for at least two years, so you can see the real takings.
2. Bookings by month, so you can see the quiet months as well as December.
3. Account customers, with each one's share of income and how long they've booked.
4. VAT returns, and how the firm treats VAT. HMRC's Notice 700/25 says an operator with employed drivers is a principal and accounts for VAT on the full fare, while an operator with self-employed drivers can be their agent, depending on the contracts and how the business actually works.
5. Whether the firm used the Tour Operators' Margin Scheme. From 2 January 2026 taxi and private hire journeys can't use it. For past periods, the Court of Appeal ruled on 12 June 2026 that the scheme doesn't cover on-demand minicab journeys (HMRC v Bolt [2026] EWCA Civ 720). Ask your accountant what that means for any VAT the company might owe.
6. The licence renewal dates. Each renewal needs an HMRC tax check code, and codes expire after 120 days.

Our guide to tax for a taxi business explains the VAT and income tax rules in full.

What should you check about the drivers?

Drivers are why the phone is worth answering, so know who they are and why they stay.

Ask for a list of every driver with licence expiry dates, vehicle details and whether each one is employed or self-employed. HMRC treats a driver who has bought or rents his own car and works on a self-employed basis as in business on his own account, and an employed driver as not. That status decides holiday pay, PAYE and VAT, so get it right before you inherit it. Our guide to self-employed or employed taxi drivers covers it.

Check the safeguarding paperwork too. The statutory standards ask councils to make drivers keep up continuous registration with the DBS Update Service, checked every six months, and expect operators to have seen a basic DBS check for everyone on their register of booking and dispatch staff.

Then talk to the drivers yourself, before completion if the seller agrees. A driver who only drove for the owner as a favour won't show up in the accounts.

Who keeps the phone number, the website and the booking data?

Put them in the sale agreement by name: the phone numbers, the website domain, any app store listings, the social media accounts and the booking system. Regulars ring the number they know, so agree in writing how the number moves to your phone provider.

Booking data needs more care, because it's passengers' personal data. The ICO's guidance on data sharing in mergers and acquisitions says both sides should establish the purposes the data was first collected for and the lawful basis for sharing it, document the sharing, think about when and how to tell the people it's about, and check the records are accurate and up to date. Once the data is yours, pay the data protection fee to the ICO unless you're exempt. Tier 1 is £52.

You also need the old booking records. Outside London, section 56 of the 1976 Act makes an operator record every booking before the journey and produce the records to the council or police on request, and the statutory standards suggest keeping them for at least six months. In a share purchase those duties stay with the company you've bought.

Check whether the seller's booking software lets you export the history, and who owns it. Our guides to who owns your taxi booking data and switching taxi dispatch system cover both. If you'd rather start the new firm on fresh software, Dispatch AI is booking and dispatch software for taxi and private hire firms: it answers your phone, WhatsApp, texts and emails, books the jobs at your prices and sends them to your drivers on your own app.

What contracts and leases come with the firm?

Read every agreement the firm relies on, because an asset sale only moves the ones the parties agree to move. Look for:

• account customers' contracts, and whether they let the customer leave if the owner changes
• council and school transport contracts, and what the council needs to approve a new owner
• finance or lease agreements on the cars, and who is liable for them
• the office lease, and the planning permission for the base: Manchester City Council asks for a copy with an operator application
• the booking software, phone and radio contracts, with their notice periods

How do you value the goodwill?

Goodwill is the part of the price above the things you can count: the cars, the equipment and the cash. It's what you pay for bookings that keep coming after the seller leaves.

So test whether they will. Ask which regulars ring the owner's own mobile, which accounts are personal friendships and which bookings come from the website or a well-known number. The more of the work that's tied to the owner personally, the less of it you can count on.

Base the price on the profit you can prove from the accounts and bank statements, not on the turnover the seller tells you. You can also agree to pay part of the price later, tied to how the bookings hold up in the first months, so the seller shares the risk.

Then, on the day you complete, tell the council about the change, update HMRC, your insurers and the ICO, and make sure every driver knows who they're working for.