Having and maintaining appropriate funds is a fundamental part of holding a vehicle operator licence because it underpins your ability to run a credible and compliant transport operation.

Because evidencing your financial standing is the most important part of the entire process, we will start there.  If you cannot evidence the required funds, your application will be rejected.  You also need to be able to evidence the funds over time so this should be a priority.

Types of Vehicle Operator Licence

You will first have to select whether you are applying for a licence in Northern Ireland or Great Britain.  Because the majority of AJT Transport Consultancy clients are based in NI, the majority of advice being given here relates to NI operator licences (albeit that most of the advice is the same across the board).

If you want to add operating centres that are outside of NI, you will need to apply for those separately.  You can only apply for operating centres on the same application that are within the same ‘traffic area’.  For example, if you have operating centres in England, Scotland or Wales (England is split into a number of ‘traffic areas’), you will need a separate operator’s licence for each location.

 There are three types of operator licence:

• Restricted Licence

Restricted licences are for those who carry their own goods or materials in connection with their business.  You will often hear the term “own account operator” associated with these types of companies.  Some examples include quarries, manufacturers, farming/agriculture, utilities companies, etc.

You may also be familiar with the term “hire and reward”.  With a restricted licence, operators cannot offer hire and reward services, i.e. they cannot provide transport services to any other company.

With a restricted licence, the operator can carry their own goods anywhere, within the UK, Europe and beyond.

It is not mandatory for restricted licence holders to have a dedicated Transport Manager; a “responsible person” will suffice.  However, in a previous post we covered the obligations of this responsible person.  We recommend that you read this here.

In a nutshell, the responsible person must be fully involved in the business.  Whilst a full Transport Manager CPC qualification may not be required, the DVA might expect the responsible person (in many cases the business owner) to complete an Operator Licence Awareness Training (OLAT) course, to ensure that they are at least aware of the compliance obligations.

To be granted an operator’s licence you need to prove you have enough money to keep your vehicles and run your business.  For a restricted licence, the level of finance needed to be evidenced is much lower than for standard national or international licences.  See relevant values below.

• Standard (National) Licence

Standard (national) licences are for those who carry goods for hire or reward in the UK only. They can also carry their own goods or materials.

A company holding a standard licence must have a transport manager who has completed a Certificate of Professional Competence (CPC) qualification.

You can read the full obligations of a Transport Manager or “competent person” in a previous article here.  The Transport Manager must have continuous, effective management of the transport operation.

• Standard (International) Licence

A standard international licence is the same as a standard national licence, but the operator can operate throughout Europe (national AND international).

Required Finances

Image Credit: GOV.UK 

Please note: these rates are correct at the time of publication (November 2022).  They are reviewed every January and stay in place for one year.

Example: you want to apply for 50 vehicles under a standard national licence.

You require evidence of the following funds:

1 x £8,000 (for your first vehicle)

49 x £4,500 (for all subsequent vehicles)

Total: £228,500

There is no charge for trailers and currently no obligation to specify individual trailer IDs on the licence.

An important note: The GOV.UK website relating to vehicle operator licence (VOL) applications advises: “If you want to leave room to expand your business, you must prove you have enough money for all the vehicles you’re planning to operate, not just the ones you’ll operate straight away.”  At AJT Transport Consultancy, we would usually advise applying for the most vehicles you can afford at the time of your initial application.  This is because it is best to minimise the number of variation applications (i.e. changes) you have to make in future, simply due to the arduousness process.  If you make a variation application, you effectively have to prove yourself all over again.

Providing Financial Evidence

To be granted a licence you need to prove that you have enough money to keep your vehicles and run your business, i.e. you have enough funds in place to employ the right people, operate and keep vehicles in a roadworthy condition, manage your compliance, maintenance, tacho analysis, etc.

At least the amounts as set out above must be provable in the 28-day period immediately before the date of your application submission (the funds must be available for 28 consecutive days within two months of the date of the application).  This is normally evidenced by submitting a bank statement showing the opening and closing balance and all itemised transactions that took place within the 28-day period. You will be asked to explain any “large or unusual” deposits to the account during the period.

The format of the bank statement is very important.  The name of the bank account must exactly match the name on the VOL application and match the name on Companies House.  For example, an application in the name ‘ABC Transport’ cannot be in the name ‘ABC Transport Ltd’ on the bank statement and on Companies House.  The statement must be an original.  If it is not original, because for example it is printed from an online banking account, your bank will need to verify the printout by signing and stamping it.  The statement will also need to show the account holder’s name and account number.

You can support your account statements with overdraft or credit facilities, but only if they are formal, written commitments from the bank; and you can use invoice finance agreements, as long as they are accompanied by some other documents to provide additional assurances.  In some cases, there is the option to provide your latest accounts but there are some eligibility criteria attached.

A brand-new Limited company can show a bank statement with opening balance and can sign a declaration committing to providing evidence of the required funds again later, after the licence has been granted.  The licence will normally be granted with conditions attached.

You can find out more about methods of financial evidence here.

It’s important to note that, although you may only be asked to evidence your finances at the initial application stage or during an application variation, you are expected to always have those funds available.  You could be asked to provide evidence at any time, particularly if there is any change in circumstances – for example, a full change to your board of directors – but this is rare.  There is also a licence continuation (renewal) at five years, which requires a written declaration confirming your funds.  Again, it is uncommon, but not unheard of, to be asked for proof.

If you need expert help with any vehicle operator licence application or variation, please contact John on +44 7894 140796 or info@ajttc.co.uk.