Taxi Driver Online

This is something that has interested me for a long time now. According to my accountant, if our company are collecting the money from the customer, in our case the County Council, we are responsible for collecting the VAT from the customer. If we are taking bookings for drivers and the driver is collecting the money then we have no liability for VAT, that would be for the driver to do if they were VAT registered. Also All money paid to the company for use of our vehicles by drivers is subject to VAT. Furthermore, we can't take the money paid to the drivers for account work and deduct this from payments made by the drivers before applying VAT.

As an example if a driver does £100 worth of work for us on account we have to charge the customer £20 VAT.
If the driver owes us £100 inc VAT for use of the vehicle we have to account for £16.67 VAT so we have to account for a total of £37.67 VAT.
We can't say that we owe the driver £100 and the driver owes us £100 so no money has changed hands so no VAT.

Now a friend of mine whose company only do account work and sub all of the work out to owner drivers has been told by his accountant that because his company is collecting the money on behalf of the owner drivers, he does not have to charge the customer VAT. The drivers pay him, well his company, 10% of all earnings. So he can collect from customers say £500,000 and there is no liability for VAT because the income of his company is only £50,000 which is below the VAT threshold.

If he collects it ...paid to him ....and gives a invoice..then it has VAT...on 500.00..or......if he earns say 30,000 and then rents out 4 cars and takes a % of the money...he is still liable for the vat on the whole amount...if it exceeds the vat threshold
30.000 him
15.000 car 1
15.000 car 2 driver takes
15,000 car 3
15,000 car 4
Total=............90.000...all of what the drivers take not just a %.

Corporation tax is 20% so they paid tax on £110,000 profit.

I'm not sure the UK taxi and PH trade can be viewed as a 'paragon of virtue' when it comes to tax.

Working it backwards....what is the vat on .....900.000

Its the VAT that interests me......surely as they take payment from the customer they are liable for the whole of the Vat on that charge..... and not just the VAT on the commission they charge the driver.....or have they been given a special dispensation....U F C

yep I don't disagree - but uber are the ones collecting the cash - not the drivers - also the customer contract is with uber, not the driver

Agent for both cash and account work

Whether you are acting as an agent depends on the terms of any written or oral contract between you and the drivers, and the actual working practices of your business. For further information on how to decide whether you are acting as an agent or a principal see the section dealing with agents in Notice 700 The VAT Guide. Typically in acting as an agent for your drivers you will:

relay bookings to the drivers (usually on a rota basis) for an agreed fee
possibly also provide them with other services such as the hire of cars or radios and
collect fares on their behalf from account customers
If you act as an agent, the drivers are entitled to the full fares paid by the customers, even though the charge for your agency services may be deducted from the account fares you collect for them.

I think you'll find that the majority of ph operators, including Uber will say they are agents for the drivers. Therefore they only have to pay V.A.T on the bit they keep

have you ever been VAT registered..?

Yes I have but what's the relevance?

agents for the drivers.