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PostPosted: Fri Jul 28, 2023 6:33 pm 
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Uber Britannia Ltd v Sefton Metropolitan Borough Council [2023] EWHC 1975 (KB) (28 July 2023)

http://www.bailii.org/ew/cases/EWHC/KB/2023/1975.html

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PostPosted: Sat Jul 29, 2023 8:10 am 
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captain cab wrote:
Uber Britannia Ltd v Sefton Metropolitan Borough Council [2023] EWHC 1975 (KB) (28 July 2023)

http://www.bailii.org/ew/cases/EWHC/KB/2023/1975.html

Not really sure what was ground breaking in this judgement that took 9 months to decide on.

But basically the Judge agreed with what Uber, Bolt and the App and Courier union put forward i.e. that the operator was always the principle and never an agent for the driver. In short the requirements that applied to London (via numerous tribunal and court hearings) also applies to operators licensed under the 1976 act.

In time this will lead to massive tax implications for operators, and I suppose eventually to drivers.

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PostPosted: Sat Jul 29, 2023 11:45 am 
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Had a quick skim read of the judgement when I got home last night, and took it all in in about twenty minutes or so :---)

To be honest, I just skimmed over the stuff about the legislation per se, and just looked mainly at some of the more economic arguments. The purely legal stuff isn't really that different from the case based on the 1998 London Act. And, as Sussex makes clear above, it was all pretty straightforward following that Uber decision with regard to the 1998 Act.

Anyway, no doubt there will be an appeal. Interesting, though, that Bolt (who I assume don't pay VAT at present) seemed to agree with Uber in the application (para 6(a)).

I'd guess Bolt knew the writing was on the wall, and that there's little chance of them being able to distinguish their model from Uber's.

But Bolt maybe thought that Delta and Veezu could be successeful, so thought it better to agree with Uber and get the more traditional private hire operators inside the VAT tent.

Anyway, the stuff about the 1976 Act etc is all a bit dense and quite difficult reading. But below are some interesting passages that stood out for me, and might be of interest to those who won't be reading the full judgement.


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PostPosted: Sat Jul 29, 2023 11:48 am 
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High Court judgement in Uber/Delta VAT position, para 58 wrote:
The courts have recognised that the “Uber model” is unique say Veezu. This is
illustrated by the fact that there had been no revision of the employment status of
drivers within the private hire sector generally in spite of the Supreme Court’s decision
in Uber BV v Aslam [2021] UKSC 5, [2021] 4 All ER 209 to the effect that the drivers
were “workers” under the Employment Rights Act 1996 s.203(3).

But why would there be any revision in the employment status of drivers in the private hire sector generally because of the Uber case in the Supreme Court?

Who's going to apply it to the trade, precisely? Not government or the licensing authorities, nor the private hire operators. Turkeys will ignore Christmas unless they're forced to acknowledge it.

It's surely up to individual drivers and local groups to take legal action, which isn't an easy course of action. Veezu surely being disingenuous here. Veezu is effectively saying that because Veezu hasn't applied the Supreme Court judgement to its own drivers then that means the judgement doesn't apply :-s

High Court judgement in Uber/Delta VAT position, para 59 wrote:
Veezu says the consequence of this application succeeding would be inevitable
increases in the cost of running a business as a private hire operator, and inevitably the
Claimant is better placed to absorb them than its smaller competitors. It would lead to
fewer smaller private hire operators in the market.

Whenever has it been an argument against VAT liability that compliance would be a greater burden on a particular business compared to a bigger one [-(

And, I mean, *Veezu* arguing that a bigger private hire business is in a better position to absorb the cost of VAT liability? :lol:

In para 57 Veezu also argues in terms of stuff like increased admin in terms of VAT compliance and that this would put them at a competitive disadvantage. But I suspect any competition lawyer would argue that it's Uber that's at a competitive disadvantage because it's paying VAT while the others aren't. And, again, it's a bit rich of *Veezu* to say that only Uber were in a position to make the necessary changes to software etc.

In her conclusions, Mrs Justice Foster seems to be accepting that some private hire providers will go out of business as a result of the judgement:

High Court judgement in Uber/Delta VAT position, para 82, Mrs Justice Foster wrote:
This is a strong rationale for the construction advanced by UBL. This aspect of public
protection, including safety, may necessitate a choice by providers of services, and may
require that certain types of service model are no longer capable of operation under the
statute, but that change is not so surprising nor so stark as to condition the approach to
construing the provisions as Sefton suggested, or Veezu and Delta argued. The
statutory purpose of the 1976 Act is established, along with that of the 1998 Act, as
being public protection. Again, I do not accept that a diminution of the PHV market
would constrain a construction of the 1976 Act against what I read as the strong
guidance of Aslam and the ULL case in respect of the 1998 Act.


Similarly, she also seems to be saying that her judgement will hasten the application of drivers being categorised as workers rather than self-employed :shock:

High Court judgement in Uber/Delta VAT position, para 83, Mrs Justice Foster wrote:
This Further, as submitted by ADCU, the arguments are not all one way. There is
considerable strength in the view that a properly regulated and remunerated pool of
drivers is a benefit to public safety.
It is clear also from The Maxwell Stamp Report
that the agency driver model was deprecated by the Committee. ADCU advanced a
series of compelling arguments to the effect that drivers’ working conditions may well
improve as a result since they would at least in some circumstances, be recognised as
workers with working time, sick pay and minimum wage rights
[...]


Basically, the judge is saying that the legislative provisions are reasonably clear and straightforward, and that the economic consequences are not valid considerations:

High Court judgement in Uber/Delta VAT position, para 85, Mrs Justice Foster wrote:
The VAT consequences for those who will wish to change their operating model are in
my judgement irrelevant. They do not condition the reading of the provisions, it could
never be said that a change in the taxation position is an absurd consequence the
draughtsman could never have contemplated would result and did not intend. It,
together with certain postulated economic consequences do not have relevance to the
exercise of statutory construction before the Court. Nor indeed, as was canvassed in
argument, is it wholly impossible that any consequent change by way of increase to
fares because of an element of taxation would necessarily be passed on to the customer.


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PostPosted: Sat Jul 29, 2023 11:57 am 
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But, to repeat what I said months ago, and without any huge knowledge of VAT law or the booking office legislation in Scotland, I find it difficult to conceive that the VAT position that applies to the whole UK would to that extent not apply in Scotland, irrespective of the fine details of the Scottish legislation.

I mean, are Uber fares in Edinburgh not subject to VAT, but Uber fares in Brighton are subject to VAT? :-o

What's the difference in terms of VAT law which applies throughout the UK, irrespective of the differences in the licensing legislation?

By the same token, if a PH circuit acts as principal when a booking is made, what is the contractual position when an HC circuit takes a booking? How, in VAT terms, could the contractual position be any different to a PH circuit? :shock:

And, more obviously, what about mixed fleets? Will the VAT position on a run depend on whether the circuit dispatches a PHV or an HC? Why should the VAT position be different? 8-[


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PostPosted: Sat Jul 29, 2023 1:39 pm 
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Loads of VAT questions arise out of this judgement.

What happens if a driver is already VAT registered, and/or already has an ops licence? Who claims the VAT and who charges it?

How will operators know the amount to charge/claim for cash work? Will drivers have to call in after every job?

What happens when an operator passes a job onto a hackney carriage?

But I look forward to seeing the end of ‘driver partners’, this is the real reason the ops were/are running scared. They don’t want to offer working rights to the drivers that work with them, but in time they are going to have to.


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PostPosted: Sat Jul 29, 2023 2:14 pm 
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Earlier in the thread I said that Bolt presumably hadn't applied the Uber VAT judgement to thier own business, but according to the TaxiPoint article Bolt is already charging VAT. Which explains their support for Uber in the Sefton case, but I'd guess that they'd have know the writing was on the wall anyway :?

TaxiPoint wrote:
Large app-based operators such as Uber, Bolt and FreeNow have already made these business model changes across England and Wales, as well as London. This judgment ensures that all other operators must now follow the same regulations.

https://www.taxi-point.co.uk/post/court ... in-england


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PostPosted: Sat Jul 29, 2023 3:44 pm 
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My understanding is that VAT has always been payable on PH journeys. The issue has now risen it’s ugly head because predominantly now customers pay by card so the drivers don’t get the money first the operator does. As most large operator companies are VAT registered they have to pay the dues. Prior to Uber, drivers collected all the money and paid money to be on the circuit and operators just paid the VAT on that money if they were VAT registered. Drivers have always been responsible for their own VAT affairs but I don’t know a single driver that was registered with VAT because they never reached the threshold were they had to. I think the only way an operator can avoid the VAT responsibility is to stop taking payments by card and for every single driver to have their own card reader in the vehicle

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PostPosted: Sat Jul 29, 2023 3:57 pm 
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My understanding is that if the operator takes a cut then the amount of the job, not just the cut, is liable to VAT.

Prior to yesterday, IMO, if the operator merely passes on a cash job, then that job wasn’t liable for VAT unless the driver is VAT registered.

What happened yesterday is the court has indirectly (I say indirectly because VAT wasn’t the primary issue in the case) decided that every fare coming from a licensed operator is liable for VAT.

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PostPosted: Sat Jul 29, 2023 4:29 pm 
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Toots, my reading of the judgement is that the payment method is irrelevant. It's all about who's regarded as the principal in the contract, which the court concluded was always the operator who takes the booking.

I could be wrong, but whether it's cash or card, or automated payments are taken directly by the driver or funneled through the operator, is irrelevant. The operator is always the principle in the contract, and thus the one liable to pay VAT.

I'm not sure if all this arose because of card payments either. Didn't some smart Alecs outside the trade think Uber was something totally new and that it was unfair that Uber wasn't paying VAT? So they eventually got Uber to pay VAT, and thus Uber cried foul because the mainstream trade wasn't paying VAT, hence the Sefton case and yesterday's decision.


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PostPosted: Sat Jul 29, 2023 4:38 pm 
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Wasn't it the Good Law Project who set the ball rolling with Uber and VAT?

You know, the group led by the elite lawyer type who clubbed a fox to death in his hen house while wearing a kimono :-s

Lives in a windmill near Brighton, apparently now worth £3m :-o

https://goodlawproject.org/case/uber-case/

I suspect he thought he was doing the mainstream trade a favour, but if he knew how the trade actually worked then he might have realised it would actually come back to haunt them...


Sussex windmill owner 'killed fox with baseball bat'

https://www.theargus.co.uk/news/1812466 ... eball-bat/

A BARRISTER who bought a historic Sussex windmill claims he killed a fox with a baseball bat on Boxing Day.


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PostPosted: Sat Jul 29, 2023 7:01 pm 
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Hi Guys, its been so long. :)

My understanding always was that the Operator in accepting the booking was contractually liable.

My similar understanding was that VAT was inclusive in Hackney Carriage fares.

I think Stuart is right, the barrister from Brighton who originally started the ball rolling with Uber, simply didn't understand how the trade operates. He said at the time he 'only wanted a receipt', which changed to a VAT receipt, so he could claim the VAT back, which presumably would have been a few pounds.

Hope you're all well.

Best Wishes

CC

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PostPosted: Mon Jul 31, 2023 3:32 pm 
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Having had another look at the judgment I'm not as confident as I was in respect of VAT on taxi fares that have been passed from an operator licensed under the 197 act.

It's really not clear cut IMO.

That said the administration of VAT on a large mixed fleet will be an absolute nightmare, unless of course, it is clear that all work issued via a 1976 act operator is VAT chargeable, whether undertaken by a taxi or a PH.

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PostPosted: Mon Jul 31, 2023 7:27 pm 
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On Sunday in another thread, Sussex wrote:
The way things stand from Friday is that every driver on a circuit, be they PH or Hackney, are entitled to workers rights as laid down by the Supreme Court in the Uber case. Actually those rights applied to us all after the Uber judgement was published, it’s just that the court on Friday confirmed indirectly that they apply to drivers licensed under the 1976 act.

What was also decided by the court on Friday was that operators are the principal contractor and councils must ensure they only license operators agreeing to that. Which in turn makes them liable for VAT on all fares.

On Sunday in another thread, Sussex wrote:
The court has clearly told councils that they must only license operators that confirm they will be the principal contractor, but surely at the same time as councils undertake that change they should also only license operators that adhere to the Supreme Court judgement in Uber, and only license operators who are offering workers rights such as sickness and holiday pay, and heaven forbid the minimum wage.

Today, Sussex wrote:
Having had another look at the judgment I'm not as confident as I was in respect of VAT on taxi fares that have been passed from an operator licensed under the 197 act.

It's really not clear cut IMO.

That said the administration of VAT on a large mixed fleet will be an absolute nightmare, unless of course, it is clear that all work issued via a 1976 act operator is VAT chargeable, whether undertaken by a taxi or a PH.

You seemed to change your tune fundamentally between Friday and Sunday, and now you're back more to your Friday position :-o

What you said on Sunday is maybe the full fat version, but maybe the VAT-lite version you're portraying today is more realistic...

I mean, as regards mainstream private hire operators in England, the decision seems reasonably clear cut, at least as regards the principal thing, if not how the whole VAT thing would be administered.

Mixed fleets probably don't really exist in the minds of the judges etc, and certainly weren't addressed in the judgement. Neither were HC circuits considered directly.

But to me it would seem totally daft for the VAT position of mixed fleets and HC-only circuits to be totally different to PH operators based on the nuances of the licensing legislation, as opposed to economic fundamentals.

And it's maybe wishful thinking to assume councils will enforce it all automatically. It's probably more down to HMRC being proactive, with local authorities following their lead if required to do so.

By the same token, the judge alluded to the employment status thing, but applying that to the whole trade is a different matter entirely, and again the judge obviously thought the HC side is a totally different beast.

And it's maybe not so clear cut on HC circuits anyway. I mean, there was quite a bit of nuance in the Bournemouth case, and there the HC journeyman driver was regarded as dependent on the circuit.

On the other hand, the Leeds case a couple of years ago viewed the HC owner-driver as merely using the circuit as a top up for his street work.

Also, I've never seen Scotland mentioned at all with regard to all of this. I mean, could the English trade be turned upside down with regards to VAT and employment status, while Scotland continues normally just because the legislation is slightly different, while employment law and VAT are supposed to be the same throughout the UK?

And, of course, it's seems likely that Friday's decision will be appealed anyway, so it'll probably take years for the whole thing to get sorted out :?


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PostPosted: Mon Jul 31, 2023 9:42 pm 
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I think for the 100% Hackney fleet issue an argument could be made that an unlicensed office could viewed as an agent.

The office need not have any license to operate, or should I say function, and anyone can take the bookings.

Not sure how successful that argument would be, but it’s not as clear cut IMO, then with an operator licensed under the 1976 act.

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