Seems entirely fair to us
Apparently Uber is allowed to trade under the same terms as all other taxi hailing operations:
However, the Supreme Court ruled in the summer that minicab companies operating outside of the capital can deploy the agency model.
So, that’s the law then.
Uber …. adding that the change brought it in line with others operating outside of London.
Seems reasonable.
Uber is to avoid paying hundreds of millions of pounds under Rachel Reeves’s new “taxi tax” by rewriting drivers’ contracts.
As we’ve been known to say there’s no such thing as tax avoidance. There are attempts at it, obviously, but upon examination these all collapse down to either tax complaiance - also known as obeying the law - or tax evasion: not obeying the law. We’d also point out that the actual difference is not Uber avoiding anything anyway - it’s that customers of Uber will pay less VAT. VAT being a tax paid by the consumer, of course.
Ms Reeves adjusted VAT rules in November’s Budget so that minicab companies would have to pay the 20pc tax on entire fares. The change will come into effect on Friday.
Currently, they pay it only on the commission paid to the companies – a fraction of the total passenger bill.
Uber’s new contract rewrites the legal relationship between the company and its drivers in a way that shifts liability for VAT to drivers.
Under what is dubbed the “agency” model, Uber effectively acts as a booking agent and it is drivers who contract directly with passengers, and are therefore liable for VAT.
Not only does this reduce Uber’s expected tax bill, it is also likely to deprive the Treasury of significant sums. Individual drivers would not be liable for VAT until they make more than £90,000 in bookings in a year, a level most are unlikely to cross.
We’ve absolutely no doubt at all that there will be some that will complain about this. We expect one ex-tax lawyer to launch a crowdfunding immediately for example. But we do think that fox has been shot given the Supreme Court ruling.
Taxi-booking firm obeys tax law. Odd that people might complain about that we think.
Tim Worstall