Taxi Driver Online

I do mean the VAT issue.

Umpteen cases on here which say that if an operator takes a cut of the fare, be that cash/card or account, then VAT is payable by the operator on the whole fare, not just the cut.

In short if they don’t take a cut then they can argue they are acting as an agent, if they take a cut they are acting as a principal.

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IDFIMH

Now as far as I have been told, VAT is already included in hackney fares and must be accounted for if the driver is taking above the VAT threshold. Not many drivers will be doing that as individuals but office bases taking bookings may well have to account for the VAT on all pre bookings.

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Grandad,

Gotcha. To be honest, I'm not that up to speed with the VAT stuff. But of course there are parallels with the employment status issue.

And to that extent I don't really see the difference between drivers paying a fixed fee or a %age fee. It's just a different way of the driver paying the operator rather than anything more substantive in economic terms.

Of course, yesterday's judgement wasn't about the VAT dimension, but it's obviously fundamental to it, so it will be interesting to see how HMRC approaches it, and whether it's considered relevant to the difference between fixed or %age fees paid by drivers to circuits.

Or at least that's my opinion, but obviously the current case law views things differently

Well indeed that's a mega-important point as regards any change in the VAT question as regards HC circuits. They can't just add VAT on to the fare, and must retain the regulated tariffs, and to that extent would be forced to take the VAT hit.

But if Sussex is right then it won't impact them anyway, because their fee model means that they're an agent, not a principal.

However, if Uber started charging drivers a fixed fee, would that avoid having to pay the VAT as the principal, and they'd then just become an agent? Of course, yesterday's ruling seemed to exclude the possibility they could simply be an agent because of the operator rules. So what about the London PH circuits charging drivers a fixed fee?

In my view yes.

If Uber didn’t take a cut then they would merely pay VAT on the weekly subs.

Which is one further reason as to why they have now gone down the road of subbing out work to traditional operators.

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IDFIMH