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PostPosted: Wed Oct 09, 2019 7:50 pm 
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Uber puts up defence against UK VAT tax probe

Uber, the company behind the ride-hailing app, has warned that operations in the UK could be crippled if it is ruled to owe VAT. It has also been under investigation by HMRC since May, over allegations that the company owes more than £1bn in back taxes

HMRC’s investigation into Uber’s taxes is one of the most significant challenges the company faces, it said in its accounts published this week. Barrister Jolyon Maugham has also dragged Uber to court over VAT, having attempted to bring a claim for a journey worth £6.34 and been denied a VAT receipt by the company.

Uber classifies itself as a software provider that connects drivers with passengers. If HMRC reclassifies it as a transportation provider, 20% VAT would apply to gross bookings "both retroactively and prospectively", Uber said in its accounts. "The Uber Group believes that the position of HMRC and the regulators in similar disputes and audits is without merit and is defending itself vigorously," the filing reads.

As well as battling both Maugham’s claim and HMRC, Uber is in the middle of a long-running licencing battle with Transport for London (TfL) after it granted the business in September a licence for only two months.

Uber had been given a 15-month provisional licence last year, after TfL initially declined to grant a licence at all.

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PostPosted: Wed Oct 09, 2019 7:58 pm 
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never thought I would say this but

Come on VAT MAN :lol: [-o<

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PostPosted: Wed Oct 09, 2019 10:01 pm 
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edders23 wrote:
never thought I would say this but

Come on VAT MAN :lol: [-o<


Just like some in the trade are saying 'come on PAYE man'?

Think many in the UK trade should be careful what they wish for as regards the outcome of this case? :shock:


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PostPosted: Thu Oct 10, 2019 12:23 pm 
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Indeed but there are many cab/ph operators out there paying VAT why should Uber get away with it

I suppose the main danger is if the VAT got together with UK GOV and lowered the VAT threshold for all taxi and PH vehicles so that all vehicles had to pay VAT on all fares. Can't see that being easily enforceable though

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PostPosted: Thu Oct 10, 2019 4:22 pm 
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FINANCIAL TIMES 10 th APRIL 2018


Uber handed further legal blow by European Court of Justice Campaigners say decision threatens regulatory protection for tech companies in EU


The European Court of Justice has dealt another legal blow to Uber, just a few months after the Luxembourg court ruled that the ride-hailing app should be regulated like a traditional taxi company.

Judges at the EU’s highest court on Tuesday ruled that the French government was within its rights to pass a criminal law in 2014 banning some illegal transport services without first notifying the European Commission of its plans.

Tech companies are granted an additional layer of protection from national legislation in the EU with draft laws affecting them needing to be approved by Brussels.

Uber had challenged France’s bypassing of the notification system after it was taken to court by a taxi driver in Lille for running its UberPop service that used unlicensed drivers.

Uber was fined €800,000 under the law in 2016 after two of its executives were found to have run an illegal service.

The ECJ said the EU’s 28 member states were allowed to “prohibit and punish the illegal exercise of a transport activity such as UberPop without having to notify the commission in advance of the draft legislation laying down criminal penalties for the exercise of such an activity”.

Campaigners for digital companies said the ruling threatens to reduce the regulatory protection that tech companies have in the EU. The decision is the latest against Uber in Europe.

In December the ECJ ruled that Uber should be classified as a taxi service, rather than a purely digital intermediation service, which opened it up to tougher transport national legislation in the EU.

Uber has been under intense global scrutiny after a series of crises, including hiding details of a mass data breach from regulators, the alleged use of spy tactics and its failure to report sex attacks by its drivers. Travis Kalanick quit as chief executive last year and was replaced by Dara Khosrowshahi.

In London, Uber has appealed against a decision by the regulator to block the renewal of its licence to operate in the capital. The city’s transport authority plans to overhaul regulations for taxis, in a move designed to increase oversight of ride-hailing companies such as Uber. The company said in a response to the French decision that the ruling would have little impact on its operations; the UberPop peer-to-peer service was suspended in 2015. The company now works only with licensed drivers in most of the EU. “As our new CEO has said, it is appropriate to regulate services such as Uber and so we will continue the dialogue with cities across Europe,”
Uber said.
Under EU law, governments wanting to regulate companies offering services in the digital economy have to first notify Brussels of their draft laws to ensure they comply with the rules of the single market.

In its ruling the ECJ said national EU laws regulating Uber’s operations did not need to be scrutinised by the European Commission because Uber was a transport company rather than an “information society service”.

“It follows that the French authorities were not required to notify the commission in advance of the draft criminal legislation in question,” said the ECJ. Damien Geradin, a partner at Euclid Law in Brussels, said the court’s decision was a blow for how tech companies are regulated in the EU. “It means that the European Commission will have limited power to prevent the adoption of national restrictive provisions affecting all sorts of digital platforms, which will impact the development of the digital sector as a whole,” said Mr Geradin

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PostPosted: Thu Oct 10, 2019 5:14 pm 
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StuartW wrote:
Think many in the UK trade should be careful what they wish for as regards the outcome of this case? :shock:

In respect of the VAT issue most of the trade operate in the way that Uber are appealing against.

If a firm takes a cut of the fare, then VAT is due on the whole fare not just the cut.

That's been the situation for many years and it makes HMRC look very bad and gutless down to the fact that it has taken them so many years to act.

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PostPosted: Thu Oct 10, 2019 5:18 pm 
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Quote:
I suppose the main danger is if the VAT got together with UK GOV and lowered the VAT threshold for all taxi and PH vehicles so that all vehicles had to pay VAT on all fares. Can't see that being easily enforceable though

I can't see any government legislating to reduce the VAT threshold. Maybe they might keep it as it is, but no way will it be lowered.

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PostPosted: Thu Oct 10, 2019 5:30 pm 
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Sussex wrote:
Quote:
I suppose the main danger is if the VAT got together with UK GOV and lowered the VAT threshold for all taxi and PH vehicles so that all vehicles had to pay VAT on all fares. Can't see that being easily enforceable though

I can't see any government legislating to reduce the VAT threshold. Maybe they might keep it as it is, but no way will it be lowered.


The way things are going tax will only increase,


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PostPosted: Fri Oct 11, 2019 6:23 pm 
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Interesting piece in the FT.

Uber’s UK VAT liability confirmed

Earlier this week Uber London Ltd filed its full accounts up until December 2018 at Companies House.

The big news wasn’t that the division made a relatively meagre profit of £5.1m. (The profit is hardly indicative of anything due to the group’s structural complexity.)

It was Note 13 which recounted the following about Uber London’s contingent liabilities:

Image

The most newsworthy part was arguably this one: “the Uber Group is involved in an ongoing dialog with HMRC, which is seeking to classify the Uber Group as a transportation provider. Being classified as a transportation provider would result in a VAT (20%) on Gross Bookings or on the service fee that the Company charges Drivers, both retroactively and prospectively.”

Uber London’s accounts do not provide any indication of the total sum being recorded as a contingent liability at Uber London’s parent, the Uber Group.

But various sources tell us the bill could be as large as £1bn, or more. These are not small sums.

But the statement is striking for other reasons too.

First, Uber says it’s in an “ongoing dialog” with HMRC which hints at a negotiation taking place to potentially lower Uber’s liability. But that’s a big no no for HMRC. The tax authorities are not supposed to cut deals with corporations on unpaid back taxes, not least because of the scale of public outrage associated with legacy sweetheart deals, which prompted far-ranging internal policy reviews.

HMRC told FT Alphaville that on an ongoing basis it investigates about half of the UK’s large businesses at any one time. As part of that process companies are man-marked with HMRC officers whose job it is to speak to the financial people at the organisation. So it could be that Uber is treating this sort of relationship as a dialogue.

But a source tells Alphaville the view at Uber seems to be that the company sees itself as in negotiations with HMRC, with a view to settling the case before the all-important outcome of its UK Supreme Court appeal regarding its employer status is determined.

The other issue is the nature of the exposure and HMRC’s overall responsibility to capture its full extent.

It’s worth noting Alphaville first alerted readers to Uber’s potential VAT tax exposure in December 2016. At that time it was well known that the tax exposure in question was contingent on Uber successfully defending a tribunal case regarding the employment status of the company’s drivers. A loss would see the company’s drivers classified as workers not contractors, which would incur costly employer liabilities upon Uber, among them a VAT liability.

This is a big deal because the threshold for UK businesses having to pay VAT at the time was a turnover of more than £81K (it’s now £85k).

Since Uber drivers mostly earn much less than that, most do not incur VAT liabilities. If Uber is deemed an employer, however, those revenues would then be deemed Uber’s rather than drivers’ — more than surpassing the VAT threshold and thus exposing the company to potentially huge VAT liabilities from then on.

But the ruling would also reveal how much tax revenue the state will have missed out on over the years because of Uber’s potentially incorrect insistence it is not an employer.

The problem for HMRC is that there is a statute of limitation that ensures the tax authority cannot claim unpaid sums beyond the past four years.

This poses a bit of a quandary for the revenue services. What is a tax authority to do if it suspects a company may be hugely underpaying tax liabilities because of an incorrect employer classification, but cannot claim those sums until a final court ruling about that classification is determined.

One course of action according to Jolyon Maugham QC, who fronts the Good Law project — a non-profit that seeks to support progressive law change in a way that reduces public distrust of the establishment — is for the tax authority to engage in something called a protective assessment as soon as possible. This would allow HMRC to protect its position by flagging that an effective inquiry has begun, in turn allowing it to seek back-taxes from four years before that point even as more time passes.

In Mr Maugham’s opinion it would be a failure of governance at HMRC for the authority not to have issued such an assessment as soon as it was made aware of the issues at stake, irrespective of the pending nature of the all important employer status appeal.

When Mr Maugham made this view known to HMRC back in March in a letter before action, however, the authority’s view seemed to be that it would need to wait until the case was determined to do so. And so, in bid to get to the bottom of the legalities of the situation, the Good Law Project announced on May 29 of this year that it would be suing HMRC via judicial review for failing “to stem losses due to Uber’s tax dodging.”

It is Mr Maugham’s contention that up to £1.1bn of tax is at stake. You can read Mr Maugham’s witness statement, which offers more details on how that figure is arrived at, here.

But there’s another issue in play. As an interested party in the action, Uber has a right to legally represent its interests in the case if it wishes. One of those interests is that the case does not inadvertently expose its private tax affairs to the general public given that in the UK, all tax affairs are deemed private and confidential, including the issue of whether protective assessments have been initiated.

Uber has made it known to Mr Maugham that it will be engaging in the case to ensure any privileged information revealed by the process stays private and confidential and subject to an order that it is “protected from onward disclosure to third parties”.

A hearing on the matter is due on November 6 at the High Court.

Of course, the fact that Uber London since filed a company account noting that a dialogue with HMRC over a VAT liability is ongoing implies some sort of protective assessment may already have been initiated. So to some extent the cat is already out of the bag.

Commenting on the case, Mr. Maugham told FT Alphaville:

It has taken three years for us to force HMRC to collect tax from Uber. Many hundreds of millions of pounds will have been lost because of its inaction. We will now turn our attention to ensuring that other big transport suppliers — such as Addison Lee — comply with the law. And to those, like Amazon, operating arrangements that seem to us to be similar in character.

In response Uber’s spokeswoman said:

We can't comment on any discussions with HMRC but we will always fulfil the tax obligations in any country in which we operate.

Finally, HMRC told Alphaville:

'We don’t comment on identifiable businesses. HMRC will always make sure that every business, no matter its size, pays all the taxes due under UK law and we don’t settle for less.'

One thing’s for sure. It’s a tax case that could have a huge bearing on Uber’s profit-and-loss at some point, with equally important implications for Uber’s operations in Europe, which also bear similar VAT exposure.

We wait and watch.

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PostPosted: Fri Oct 11, 2019 6:49 pm 
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Jolyon Maugham QC wrote:
It has taken three years for us to force HMRC to collect tax from Uber. Many hundreds of millions of pounds will have been lost because of its inaction. We will now turn our attention to ensuring that other big transport suppliers — such as Addison Lee — comply with the law. And to those, like Amazon, operating arrangements that seem to us to be similar in character


Not to mention Fred's Cars in Anytown :roll:

Interesting that Jolyon Maugham QC is leading the charge against Uber, though.

He's also one of the prominent figures in the legal processes trying to stop Brexit, thus a bit of a conflict of loyalties in view of the stance of many posters on here?

I never watch BBC Question Time, but was reading online that Maugham said that the Julia Hartley-Brewer shouldn't have been a guest last night, because she published Maugham's home address online and thus he was put in danger?

Of course, she didn't actually publish his *address* - she simply put up a link to a newspaper article in which he was bragging about restoring some historic windmill with the thick end of a million quid, or whatever.

Not sure if this was the article, but it's along the same lines:

https://www.theargus.co.uk/news/1050366 ... -windmill/


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PostPosted: Fri Oct 11, 2019 6:57 pm 
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Uber says it’s in an “ongoing dialog” with HMRC which hints at a negotiation taking place to potentially lower Uber’s liability. But that’s a big no no for HMRC. The tax authorities are not supposed to cut deals with corporations on unpaid back taxes,
:lol: :lol: :lol:

Starbucks & Google to that :roll:

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PostPosted: Sun Oct 13, 2019 3:38 pm 
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This appeared on Jo Maugham QC's Crowd Funding site.

Progress at last

After years of pressure from us, funded by you, Uber now accepts it is likely to have to charge VAT to its customers and hand over unpaid VAT to HMRC.

We know this because it has told us that under its US accounts it will recognise a contingent liability. And as I understand matters (I am not a US accountant) a company recognises a contingent liability, as Uber has done, when it thinks it has a more than 50/50 prospect of having to pay it. So Uber thinks it has a more than 50/50 prospect of having to charge VAT - and hand over unpaid VAT.

You can read more in the Financial Times here. We will continue with our judicial review proceedings until we have absolute clarity - and our next hearing is on 6 November. We will report further as more information comes to light.

Thanks for your support,

Jo Maugham QC

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