Uber’s VAT Court Win Overturned in Appeal
A landmark decision from the Court of Appeals has overturned a High Court ruling stating that private hire vehicle operators entered into a contract with customers when accepting bookings. This means operators will not face a 20% tax charge on their profit margins, outside of London.
The appeal was brought by Veezu Holdings Ltd and D.E.L.T.A Merseyside Ltd, 2 of the UK’s largest private hire operators, who challenged the ruling based on the argument that their business models did not require them to act as principals.
Timeline of Events
The VAT issue has been ongoing for several years at this point, originally starting back in 2021 when the Supreme Court ruled that Uber drivers were workers rather than contractors. Below is a timeline of the key events that have brought us to the most recent ruling:
February 2021: The UK Supreme Court rules that Uber drivers are workers, prompting questions about tax liability.
October 2022: HMRC issues Uber a VAT bill of £386 million, covering unpaid VAT on rides between 2017 and 2022. This bill arises from the enforcement of VAT following legal rulings that classify Uber as a principal in bookings.
December 2021: The High Court solidifies Uber's VAT obligations by declaring the company as the principal in transactions.
March 2022: Uber begins charging a 20% VAT on all rides in the UK.
July 2023: The High Court broadens VAT obligations to include around 16,000 private hire operators across the UK, indicating that VAT should apply to similar services, not just Uber.
August 2023: The UK Court of Appeal grants private hire operators permission to challenge the July 2023 VAT ruling, indicating that the decision is not yet final and could be overturned.
March 2024: The UK Budget announces a consultation to explore the broader application of VAT to private hire vehicles, recognizing the ongoing legal debates.
July 2024: The Court of Appeal overturns the July 2023 ruling, effectively deciding that VAT obligations should remain limited to Uber and not extend to other private hire operators.
In an interview with TaxiPoint, Layla Barke-Jones, partner at Aaron and Partners, who represented Delta Merseyside in the case, said:
“Today’s decision handed down by the Court of Appeal is a victory for the taxi industry and all those who depend on it.”
“The collective aim for us and our client in this case has always been to protect passengers and taxi firms alike, so the news customers outside London won’t have to have VAT forced upon them will bring a collective sigh of relief.”
“Despite positive economic indications of late, everyone knows that the cost-of-living crisis has hit working families everywhere. The last thing anyone needed was yet another price hike,”
“Vulnerable consumers caught in the crossfire of Uber’s lawsuit rely on the services offered by taxi firms.
“The government recognised the potential impact of the initial High Court judgment by launching a consultation identifying that thousands of firms would need to change their operating model forcing them to now collect VAT from passengers.”
Unsurprisingly, Uber is not taking this decision lying down. In response, a spokesperson said:
“We will review the judgment in detail and consider our next steps. This verdict means that the requirements for operators are now inconsistent between London and the rest of England and Wales.”
Considering the constant legal battles Uber have faced, it seems likely that they will respond strongly to this recent ruling.
This landmark decision highlights how critical it is for industry voices to be heard when shaping the future of the taxi and private hire sector. With ongoing legal challenges and potential regulatory changes, now is the time for drivers to share their insights on key industry issues. Our National Taxi and Private Hire Survey is your opportunity to influence these discussions and contribute to shaping policies that impact your livelihood.
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