A Somerset taxi firm is threatening legal action against the local council over its use of volunteer drivers which it says is doing it out of business.
CJW Taxis in Glastonbury says some drivers working on behalf of Somerset County Council should be licensed.
The government says volunteers can receive 45p a mile in expenses up to 10,000 miles. CJW claims some council drivers get paid beyond that limit.
The council said it was reviewing its volunteer drivers scheme.
A spokesman said: "We have written to all our voluntary drivers this week and plan to discuss the situation with them directly.
"Until those talks have taken place, we have nothing further to add at this stage."
Councils rely on a network of volunteer drivers to take those who cannot use public transport to hospitals, clinics and social functions.
In 2012, there were 241 volunteer drivers working on behalf of Somerset County Council.
Figures obtained by BBC Somerset showed that more than half of them drove more than 10,000 miles a year.
Solicitor Paul Lyon, acting on behalf of CJW Taxis, said: "The Department of Transport has made clear that whilst they support volunteer drivers, a genuine volunteer driver is only one who does not receive any profit from its activity.
"The current use of volunteer drivers by Somerset County Council can lead to an interpretation that a profit is being made.
Portsmouth Taxi drivers 200-STRONG petition calling for a cap on taxi licences was handed to Fareham Borough Council last night.
Fareham Hackney Taxi Association claims there are too many taxis in the town.
There are 233 hackney carriages licensed in Fareham. In neighbouring authorities, Portsmouth is capped at 234 and Southampton is capped at 283, although the population of each of the cities is considerably more than that of Fareham.
Fareham removed its cap 27 years ago, when a taxi company threatened the council with legal action unless it made more licences available.
Fareham Hackney Taxi Association said that now is the time to revisit the regulation.
The association claims that there is not enough work for drivers to go round and that income has been affected.
Secretary of Fareham Hackney Taxi Association Mel Charlton, who runs Meon Cars, said: ‘We are asking the council to stop issuing plates and badges.
‘Any business would not employ more people if there wasn’t enough trade and this should be the same at the council.
‘They are absolutely flooding the market.
‘This weekend most people went to Whiteley. If there’s nothing to come to Fareham for, then there will be no demand for taxis. To keep issuing plates goes against any duty of care that the council should have in making sure we can actually earn a living.’
Chairman of Fareham Hackney Taxi Association Simon Nelson said: ‘The proportion of taxis on Fareham compared to the population is a lot higher than in Portsmouth and Southampton. We don’t make a living any more, we just survive.’
Council leader Sean Woodward said: ‘In Portsmouth, the taxi plates are limited which means they change hands for thousands of pounds.
‘We run an unlimited system which is controlled by the market. If people did not think they could make a living then they would not apply.
‘Also, I would ask them, which ones would want to give up their licences if we brought in a cap which was less?’
The licensing committee will consider whether or not to review the figure and implement a cap.
The council said that a cap would cost £15,000 a year to maintain, which would be added to the cabbies’ annual licence fee.