Taxi Driver Online

Well this is interesting, and explains why we couldn't work out why Uber was getting away with using the Tour Operators' Margin Scheme to pay VAT

Seems that HMRC hadn't agreed to the application of the scheme after all

(This is the simplified version of the thing in the Evening Standard, which uses the word 'profit' rather than 'margin', but it's essentially the same thing. I think )


Taxman pursuing Uber for another £386 million in VAT

https://www.standard.co.uk/business/tax ... 98175.html

The dispute relates to whether VAT is applied to Uber’s profit per ride or the cost of the journey itself

The taxman is chasing rideshare service Uber for another £386 million worth of VAT, after it paid a £615 million settlement last year.

As first reported by lawyer Dan Neidle of Tax Policy Associates, Uber revealed in its half-year results last night that HMRC “disputed the amount and manner in which we were applying VAT to our UK business”.

The San Francisco-based company had previously argued it was exempt from VAT because its drivers had been classed as self-employed. However, after a Supreme Court judgement required its drivers to be considered employees, it faced questions of whether VAT now applied.

In November of 2022 it handed £615 million to HMRC to resolve the claims.

The extra £386 million demanded by HMRC is because it challenged Uber’s application of a set of rules designed to simplify the tax for tour operators and similar businesses, which is also used by its rideshare rivals and minicab firms.

Under these rules, which apply to companies that transport passengers without meaningfully “altering” the service, VAT would only apply on Uber’s profit for each journey.

A spokesperson said: “Uber is seeking clarity for the whole industry in order to protect drivers and passengers.”

Uber argues that, without these rules, customers would end up paying more for journeys as they would be the ones paying VAT.

Uber will dispute the charge in court, but because of the rules around tax appeals, it was required to pay the total first, and will only get the £386 million back if it wins.

There is no date set yet for the court case, but it is hoped that the issue could be settled soon as other firms could also dispute the assessment.

Last week, Uber won a High Court case over how VAT was applied by private taxi businesses located outside of London.

This is the more complex version, and the source of the Evening Standard's version above:

https://www.taxpolicy.org.uk/2023/08/02/uber/

Uber has just argued, successfully, that they are the principal under the 1976 act. Now they appear to be saying that they are only a little bit principal.

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IDFIMH

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IDFIMH

Anyone see this from the NPHTA in a TaxiPoint article yesterday?

And, funnily enough, comprehensively contradicted by Delta's legal representative in the next couple of paragraphs:

Also this in the Echo, which contains a slightly mysterious comment from HM Treasury.


Which, looking at it very crudely, agrees with the NPHTA and demonstrates that Delta, Veezu and the rest are panicking about nothing.

On the other hand, the High Court ruling doesn't actually change the tax status of private hire journeys - the tax status per se doesn't change - although the fact that the case changes the contractual situation as regards who's the principal, then it does have profound VAT implications.

Or at least, that's presumably what HM Treasury is saying, because if they're genuinely saying the ruling changes nothing then that totally contradicts what they're saying above as regards Uber's VAT position

I have been reading the tour operators margin scheme and I can see how UBER are making their assumption. There are a couple of bits in there that taken on their own could be interpreted as correct but it is when you read the whole thing you have to say "how the hell did they think they could get away with that."

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Grandad,

Uber unprincipled? Surely not.

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Former taxi driver

Some people in this trade are living in a dream world.

The likes of Delta and Veezu wouldn't have given a flying f*** about the principal issue if it didn't involve the issue of VAT.

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IDFIMH

They know they can't get away with it, they are just doing what they always do, dragging matters out.

I can understand the Tour Operator scheme when firms are dealing with companies abroad, with different VAT rates that don't apply in the UK.

But the whole process of taxi and PH bookings in the UK, remains in the UK.

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IDFIMH