Group Structures and O-Licences: Subsidiaries, Holding Companies and Shared Fleets

Growing haulage businesses often end up with several companies: a holding company at the top, operating subsidiaries, maybe a property company holding the yard. Operator licensing follows legal entities, not brands or trading names, and the group structure that suits your accountant can quietly break your licences if nobody maps it across.

The core rule: one user, one licence

The goods vehicle operator licensing guide says the licence must be applied for in the name of the person, company or partnership that is the “user” of the vehicles. You are the user if you are the driver and owner, if the vehicle is in your lawful possession under a hire, hire purchase or loan agreement, or if the driver is your employee or agent.

That definition does real work in a group. The entity that employs the drivers and directs the vehicles is the user, and that is the entity that needs to hold the licence, regardless of which group company owns the trucks on paper.

The holding company provision

There is one built-in piece of flexibility. The licensing guide says that if a holding company applies for an operator licence, it can include the vehicles of any named subsidiary of which it owns more than 50%. And if a licence is granted to a holding company that later acquires a subsidiary, the subsidiary’s vehicles can be added to the holding company’s licence.

Two cautions come with that:

• Ownership threshold. The more-than-50% ownership test matters. A 50/50 joint venture company does not qualify.
• It is not automatic. Adding a newly acquired subsidiary’s vehicles may involve a change to the holding company’s licence, and the guide says to contact the Office of the Traffic Commissioner for advice. If an increase in authorisation is needed to take the extra vehicles, an application has to be made to a traffic commissioner, with the usual lead time.

What group structures cannot do

Share a licence between trading subsidiaries. Two sister companies that both employ drivers and run trucks each need their own licence unless one of them, or the holding company, is genuinely the user of all the vehicles under the definition.

Run vehicles on the “group” licence informally. If Company A holds the licence but Company B’s drivers are actually doing the work under B’s direction, B is the user and is operating without a licence. That is the section 2 offence, and it can surface at the worst moment: a roadside stop, an acquisition due diligence, or a public inquiry.

Transfer licences in a restructure. The licensing guide is unambiguous: goods vehicle operator licences are not transferable. It is against the law to operate as a new or different entity without informing a traffic commissioner, and a new licence for the new entity must be obtained before operating.

Restructuring without stopping the trucks

The practical sequence when operations move between group companies:

1. Apply first. The new entity applies for its own licence well before the change, with its own transport manager arrangements, financial standing evidence and operating centre details.
2. Mind the operating centre. If the new entity will use the yard currently on another group licence, there is a special provision for transferring operating centres. In defined circumstances the application may not need to be advertised, conditions attached to the centre transfer with it, and undertakings must be repeated by the new operator. Approval of a Schedule 4 transfer is at the commissioner’s discretion, and it can be refused where the site has a history of objections.
3. Notify within 28 days. Licence holders must tell the commissioner of relevant changes within 28 days, including any change in legal entity and changes among partners or company officers. Missing notifications is itself grounds for regulatory action.
4. Only then operate. The new entity must not put vehicles on the road until its licence is granted.

The transport manager angle

Group structures also interact with professional competence. A transport manager can be nominated on more than one licence, subject to the external transport manager caps (four operators and 50 vehicles in total) and the requirement for effective and continuous management of each operation. A single group transport manager is common and legitimate, but the commissioner will look at whether the arrangement is real on each licence.

A quick group health check

• Which entity is the “user” of each vehicle, applying the driver/employment test?
• Does every user entity hold its own licence, or sit properly within a holding company licence?
• Are subsidiary names and ownership percentages current on the licence?
• Are operating centres specified on the right licence?

Get those four answers right and the group structure and the licences can coexist happily. Get them wrong and you are looking at unlicensed operation inside your own group.

Sources

• Goods vehicle operator licensing guide (GOV.UK)
• Senior Traffic Commissioner’s statutory guidance and directions (GOV.UK)