Taxi Driver Online

HMRC risks paying Uber £1.3bn after court defeat

https://www.telegraph.co.uk/business/20 ... rt-defeat/

Tax authority fails to overturn legal ruling against rival minicab app Bolt.

HMRC could be forced to repay Uber £1.3bn after losing a key court battle over attempts to charge VAT on minicab fares.

The tax authority is at risk of steep payments after failing to overturn a legal ruling against Bolt, Uber’s Estonian rival.

This decision is likely to have implications for other ride-hailing apps, including Uber, which has been battling HMRC over the £1.3bn VAT bill it has been charged since 2022.

HMRC would have to reimburse Uber if the company’s own legal challenge, made on similar grounds to Bolt’s, is successful.

Uber, Bolt and other minicab apps were forced to change their legal model in 2022 after a court forced them to classify drivers as workers rather than being self-employed.

The change meant the apps were classified as the “principal” doing business with passengers rather than a mere “agent” connecting them with drivers.

This made the companies liable for VAT. However, while HMRC has insisted the 20pc tax should be paid on the entire fare, Uber and Bolt have insisted it should only be charged on their fee.

Uber takes a 25pc cut of fares, while Bolt takes between 15pc and 20pc.

Uber has paid HMRC hundreds of millions of pounds a year in VAT since the change, prompting them to launch an appeal through the courts. That challenge has been on hold until the outcome of the Bolt case.

Bolt won an initial victory in 2023 when the tax tribunal ruled that “mobile ride-hailing services” should be covered by the Tour Operators’ Margin Scheme, which covers businesses such as travel agents and only charges VAT on what operators charge.

On Monday, HMRC’s appeal at the Upper Tribunal of the Tax and Chancery chamber was dismissed, although it is now considering a further challenge in the Court of Appeal.

A spokesman said: “The Government is carefully reviewing the tribunal’s decision and will consider next steps.”

A Bolt spokesman said: “We welcome the court’s decision, which reaffirms that Bolt’s use of the Tour Operators’ Margin Scheme is fully compliant with UK tax law.

“This is a win for the 100,000 driver-entrepreneurs that earn through our platform, and the millions of passengers that depend on affordable and accessible transport.”

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IDFIMH

The above reaffirms my view that the Delta & Veezu case has sweet f*** all to do with VAT and everything to do with workers'/drivers' rights.

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IDFIMH

I've been saying for years we need a redefination of self employment by the government to sort this out once and for all ! It gets way too abused in my opinion

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

The decision by the Tribunal merely confirms the tax position that has been in place for many years. A position agreed by several taxi/tax court judgements that can be found on TDO.

Basically, VAT is applicable on the commission/margin part of a job, but not on the whole job if undertaken by self-employed drivers.

As for Uber getting some kind of tax rebate, well can't see how that can happen as the issue between them and HMRC is that HMRC wants VAT on the whole of the fare, whereas Uber has only been paying VAT on the commission/margin.

So the best Uber can do is to basically stay even.

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IDFIMH