Taxi Driver Online

It appears Uber have agreed to pay £600+ million VAT to HMRC, this will most probably have a knock on effect to private hire operators everywhere.

Ooft.

That would certainly be a big one. But, like the employment status stuff (which has parallels in terms of the contractual relationship between drivers and operators etc) whether it has a wider knock on effect would depend on how it's enforced. Not precisely sure how it works, but it seems that the employment status stuff depends on action being taken against individual operators, which is why it's not happening very often except, for example, the likes of Bound's in Northampton and Airport Cars at Gatwick.

On the other hand, obviously VAT enforcement and collection is down to HMRC, so it may be that they'll be more proactive as regards targeting other operators, and it would be a nationwide thing rather than piecemeal against individual firms, and wouldn't depend on drivers putting their heads above the parapet

But, as with the employment status ruling, Uber will certainly call for other operators to be treated similarly, as per this article from this morning


Local cabbie prices could spiral following Uber lawsuit over VAT

https://www.cityam.com/local-cabbie-pri ... -over-vat/

Taxi firms could be forced to up their prices by a fifth as Uber calls for cabbies across the country to pay VAT on their journeys.

A High Court hearing is expected to be handed down this week after the ride-hailing giant sued Sefton Council about VAT terms operating outside of London.

However, a series of rulings have raised question marks over this situation.

Not only did a Supreme Court ruling find that taxi contracts exist between passengers and operators, rather than with drivers, but a 2021 High Court ruling found that London private hire vehicle (PHV) operators must contract directly with passengers to provide the journey.

This meant that Uber, as a VAT-registered firm, must pay VAT on every taxi ride in the capital and make significant business model changes.

Uber told City A.M that it had completed the changes as required by law, but said that it “considers that the PHV regulation in the rest of England, Wales and Northern Ireland is substantially the same as London, so Uber applied these changes across the UK.”

This week’s hearing is a matter of contractual law expanding beyond London, and whether a licensed operator who accepts a booking is required to enter as principal into a contractual obligation with that passenger – meaning they must pay the 20 per cent levy on each journey.

If the court rules in favour of Uber, it could mean that all taxi bookings, for all operators around the country, would see an automatic hike in fares, placing additional regulatory burden on operators of all sizes.

The reaction has been mixed, especially as the cost of living and energy crisis continues to batter household budgets.

“As a driver, it feels like a double-hit. We’ve already had to raise fares as a result of fuel prices, and another hike would be really quite worrying for the communities we service,” Gareth Cadwallader, a taxi driver in Shrewsbury told City A.M.

“A 20 per cent increase would hit the ordinary working people, who use cabs the most, the hardest.”

Conservative MP for Solihull Julian Knight also raised concerns with the Chancellor of the Exchequer earlier this month about the impact on prices.

The government said it currently has no plans to introduce a new charge, but would be “closely monitoring ongoing deliberations by UK courts that may inform the VAT treatment of taxis and PHVs”.

A decision from the court is expected to be handed down on 3 November.

Since the 1970s, private hire journeys have not been eligible for VAT as the driver was treated as the principal for tax purposes, and their earnings fell below the required threshold.

This is mainly about Uber's latest financial figures, but the VAT settlement is mentioned.


Uber passenger numbers surpass pre-pandemic levels

https://www.ft.com/content/fe20a539-bd6 ... 62c3d5be7d

Company warns strong dollar will hit revenues by $1.8bn in fourth quarter

Uber said passenger numbers were now higher than before the pandemic, helping its third-quarter revenues and earnings to exceed analysts’ expectations.

It comes as the global ride-hailing group on Tuesday said it had this week “resolved all outstanding HMRC VAT claims” related to the change in classification of its UK ride-hailing drivers as workers rather than contractors, following a long legal battle. Uber will pay $615mn to HMRC, the UK tax authority, to settle the case.

Chief executive Dara Khosrowshahi said Uber had benefited from “cities reopening, travel booming, and, more broadly, a continued shift of consumer spending from retail to services”.

“We’ve seen these trends continue into the fourth quarter, with October tracking to be our best month ever for both mobility and total company gross bookings,” he said.

However, it became the latest US tech group to warn about the impact of the strong dollar. On Tuesday, San Francisco-based Uber said the rising dollar would result in a $1.8bn hit to gross bookings in the fourth quarter.

This follows similar warnings from other US multinationals this earnings season, including Amazon and Shopify, as the dollar has risen almost 16 per cent this year on the back of aggressive interest rate rises from the Federal Reserve.

Against a weak comparison from 2021 when Covid-19 shutdowns hit the company’s income, Uber’s revenue rose 72 per cent in the three months to September 30 to $8.3bn, ahead of consensus estimates of $8.1bn according to data from S&P Capital IQ.

Overall, monthly active users of Uber’s services increased 14 per cent year on year to 124mn, with mobility customers up 22 per cent — which includes ride-hailing, bikes, scooters and booking public transport — and a strong recovery in airport trips. While trips per active customer rose to 5.3 per month, usage remains behind pre-pandemic levels of 5.7 trips.

Net losses halved from $2.4bn a year ago to $1.2bn, of which $512mn was an unrealised loss related to its equity investments, primarily the Chinese ride-hailing group Didi.

After recording its first-ever cash flow positive quarter in August, Uber reported free cash flow of $358mn, 6 per cent below the previous three months.

Adjusted earnings — Uber’s preferred measure of profitability — also beat analysts’ estimates, up from $8mn to $516mn, thanks to improvements at both its mobility and food delivery business units.

In food delivery, where many operators have been forced to cut back on discounts and promotions by dwindling investment in the sector from venture capitalists and greater pressure to show profits for public companies, Khosrowshahi said he welcomed “the newfound capital discipline among our peers”.

Laying out expectations for the remainder of the year, Khosrowshahi said he expected adjusted earnings to rise to a range of $600mn to $630mn in the final quarter of 2022, again above consensus estimates of $573mn.

Shares in Uber were about 8 per cent higher in pre-market New York trading following publication of the figures.

Uber said this in its financial release (which is good bedtime reading for anoraks, so just the VAT bit here).


https://www.businesswire.com/news/home/ ... Quarter-20

I think that taxi and private hire fares should be zero rated because with the current threshold of around £85,000 a small firm has no incentive to build to go above that level because you can't add VAT to a taxi fare the same as other businesses because it is deemed to be in the fare already so anyone earning above the threshold is instantly at a disadvantage.
By definition how is value added to a taxi journey in order for it to be taxed.
By the way we have been VAT registered for years and VAT is accounted for on the full fare.

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Grandad,

not to mention the increased paperwork associated with accounting for VAT which is why I kept my business at a certain limit

so it has taken quite a few years for Uber to agree and finally settle this and I presume the "new" operating model gets them out of the VAT trap or a significant part of it

and I would think that all £615 million will be swallowed by the current financial mess the government is in

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lack of modern legislation is the iceberg sinking the titanic of the transport sector

Don't VAT returns now need be submitted monthly and also via authorised software (Sage , QukickBooks etc)

soon I don't think they've closed the portal yet BUT all businesses will soon have to keep and submit all their records via such software

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lack of modern legislation is the iceberg sinking the titanic of the transport sector

I’m not an expert on many things, one of them being tax law, but I would be surprised if the vast majority of us had to charge VAT on our fares.

Same, IMO, for operators, other than on account bookings which they take a % of.

But no doubt the courts will tell us soon.

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IDFIMH

Ours is still quarterly.

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Grandad,

If an operator is above the VAT threshold then they must account for VAT on all income. Before our drivers became employees we accounted for VAT on the money they paid into the company, now it is on the full fare.
A one man band is not likely to reach the threshold but a husband and wife team could. Not that long ago we had a driver whose school runs fitted together very well and they came to over £1000 per week. She used to regularly take over £1700 per week.

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Grandad,

We haven't had to do any paperwork for our VAT for several years it is all taken care of in our accounting software.

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Grandad,

What makes you say that?

To me it's a bit like the employment status thing. If it applies to Uber, why not any other bog standard private hire operator, a fortiori

I didn't know Uber were suing Sefton Council with regard to the VAT thing, and to be honest I'd don't really get the Sefton Council thing

But recall that the original Uber VAT ruling only applied to London because it was tied up with the PH operator licensing regime.

Which begs the question, if Uber liable for VAT under the London PH licensing regime, why not the rest of England under the 1976 Act.

At a rough guess I'd say Uber want the law clarified outside London because they want the rest of the trade to follow suit, so they're challenging Sefton Council as some sort of test case.

Uber will consider that it's unfair competition if they have to apply VAT to fares and others don't - recall that they upped their fares by 20% after the London-based ruling.

At that time they called on other London operators to pay VAT as well, and now they're calling for the trade elsewhere to follow suit, which is why they've went down the litigation route with Sefton MBC.

Then there's HC circuits and mixed circuits, and the fact that HC fares can't be raised by the trade because they're deemed to include VAT

This could get very messy

The Sefton thing is ‘if not Sefton then someone else’ issue. I suspect an agreement on costs has already been made.

In other words no particular reason and it could have been anywhere bar London.

In respect of why I take that view it’s because that’s where we are now. If an operator passes on a cash job then any liabilities passes to the driver, who if their income is less than the VAT threshold doesn’t charge VAT.

Same for account work where the operator doesn’t take a cut. This could possibly change should the courts decide on that.

If an operator takes a cut on an account job then VAT is due on the whole job, not just the cut.

What has rather miffed me is the whole ‘head in the sand’ approach from HMRC and the government on this issue. Courts shouldn’t be used in this way. If HMRC are not sure what’s what then they should go to government and ask for new legislation to deal with this issue.

Maybe someone in government needs to remember who won the English Cilvil War.

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IDFIMH

But I’m not sure Uber are being singled out.

Anyone else who operates a similar business model to Uber will have the same tax liabilities as Uber.

The issue is most of the UK’s trade doesn’t. They operate on a weekly rent. Or in the case of independent hackneys no rent.

Clearly Uber’s new cuckoo approach might struggle if Uber has to charge VAT on any cut, but hey ho.

But all this will go down to as to whether or not the government wants to up cab fares by 20%.

And despite them needing the revenue, I just can’t see that happening.

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IDFIMH