Boro Taxis boss, Mohammed Bashir, said although the decision is "morally totally wrong", the company can no longer afford to use eight-seater minibuses to pick up a single fare-paying disabled passenger.
Teeside taxi operators were recently told they could lose their licences if they overcharge disabled people after a report found they were often paying double.
He told BBC Tees: "The simple fact is if you order a car and four people jump in you are charged for a taxi. If you order an eight-seater minibus and eight people jump in you are charged for a minibus.
"If you order a minibus and there’s only one person you will still be charged for a minibus because that’s what you ordered.
"But because we are charging for a minibus we are breaking the law."
Middlesbrough Council is investigating the issue.