It would seem that, as with the tax situation, its too much hard work (read: they can't be bothered) to actually catch the people committing the criminal act, so they decided it would be easier to change the legislation so that the offense isn't using the vehicle on the public road whilst its uninsured, but owning a taxed vehicle that is not covered by a current insurance policy. That way you don't have to venture out into the big scary world to catch offenders, instead you can fine people from a nice warm office in Swansea, and make a load more money in the process.
Yes, as has been mentioned, it will generally be the law abiding citizens that get caught by this, and the people that are being used as the excuse for the change will carry on regardless. After all why would you pay the fine if you can't be bothered to pay for the insurance or tax?
The insurance companies will be rubbing their hands together over this, as they will have us over a barrel. Just think, your insurance is due for renewal on a car you don't use that often, you can't get a policy that you want at a price you can afford or as has been mentioned you need to wait till the next pay packet to pay for it. So you think I'll leave it in the garage till then and sort it once I have the money, how many people have done that? Well now you will also have to send the tax back and declare it as Sorn'd to conform to the new rules, otherwise you will be fined even thought the cars not left the garage!!
So you leave the car in the garage and send the tax back in, as Rob has said you need to join the queue at the post office to send the tax disc back to get your money refunded. As far as I'm aware they only refund the remaining full months left to run on the tax disc, once they have received it. So you will inevitably lose the current month of your tax, so that will also leave you out of pocket, deep joy! So unless they modernise the tax system so the your refunded amount would be back dated to the sorn declaration date, which you can do online, you'll lose money on the tax refund.
This legislation has been on the horizon for a while, and is a hangover from the car loving new labour government.
So watch out for even more of the insurance companies deciding to automatically renew your policy for you, at an inflated price no doubt, and be prepared to lose money when you have a vehicle that is between insurance companies.