Uber and VAT

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Discussion

anonymous-user

Original Poster:

53 months

Saturday 11th March 2017
quotequote all
A crowdfunded legal action challenging the VAT treatment of Uber across Europe is being launched in the coming days by The Good Law Project

Here is a short introduction for anyone interested

https://twitter.com/goodlawproject/status/84048191...

Northern Munkee

5,354 posts

199 months

Saturday 11th March 2017
quotequote all
Don't like Maugham but on the topic it sounds reading the article spot on, reasoning appears sound, and HMRC should be doing this, not sure of the amount the exchequer is likely to gain, but I wonder how much it stands to gain that it might not have needed an increase in Class 4 self employed NI for instance. Govt spending comes from taxes and borrowing, and stuff needs to be paid for.

anonymous-user

Original Poster:

53 months

Saturday 11th March 2017
quotequote all
My thoughts are that if I set up a mini cab firm that did £86k turnover and hadn't registered for vat, I would be jumped on from a great height by HMRC

Yet uber doesn't even seem to be on HMRC's radar and it is taking this action to even get the matter looked at

HMRC should either state that uber is ok re vat or take this case on itself. There should be no need for a private case of this nature to get this far.

Edited by anonymous-user on Saturday 11th March 10:50

PurpleMoonlight

22,362 posts

156 months

Saturday 11th March 2017
quotequote all
Does UBER charge VAT on the commission it charges the drivers?

anonymous-user

Original Poster:

53 months

Saturday 11th March 2017
quotequote all
Northern Munkee said:
Don't like Maugham but on the topic it sounds reading the article spot on, reasoning appears sound, and HMRC should be doing this, not sure of the amount the exchequer is likely to gain, but I wonder how much it stands to gain that it might not have needed an increase in Class 4 self employed NI for instance. Govt spending comes from taxes and borrowing, and stuff needs to be paid for.
Agree with what you say except for the last sentence. Our government and its predecessors for decades have been nothing short of profligate in their spending. Fewer MPs, a greatly reduced HOL, a lot less meddling and 'overhauling' of perfectly adequate laws and systems, cutting of non productive budgets would soon make a difference. Not that it'll happen.

None the less, crocks of st such as Uber should be paying as everyone else has to. And they'd better get it quick, hard to see it continuing in its current form for long with the massive losses it's incurring.

anonymous-user

Original Poster:

53 months

Saturday 11th March 2017
quotequote all
I haven't seen the details of the case (yet - it launches this week)

But, from reading around it a bit, it seems to boil down to this (I could be wholly wrong here)

Uber, by being based in NL, works on the basis that services provided outside NL are zero rated for VAT

The Good Law Project, on the basis of the findings of the much publicised Employment Tribunal case involving Uber, believes that the services are being provided by a UK subsidiary (the same one that the ET judged the drivers to be working for) and should, therefore, be standard rated for UK VAT

Here is Jolyon Maugham QC (the Director of The Good Law Project) on the subject

https://waitingfortax.com/2016/12/20/thats-one-ube...

Police State

4,063 posts

219 months

Saturday 11th March 2017
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Police State said:
When you have people like George Osborne allegedly leaning on Legislatures on your behalf, anything is possible.

PurpleMoonlight

22,362 posts

156 months

Saturday 11th March 2017
quotequote all
JPJPJP said:
I haven't seen the details of the case (yet - it launches this week)

But, from reading around it a bit, it seems to boil down to this (I could be wholly wrong here)

Uber, by being based in NL, works on the basis that services provided outside NL are zero rated for VAT

The Good Law Project, on the basis of the findings of the much publicised Employment Tribunal case involving Uber, believes that the services are being provided by a UK subsidiary (the same one that the ET judged the drivers to be working for) and should, therefore, be standard rated for UK VAT

Here is Jolyon Maugham QC (the Director of The Good Law Project) on the subject

https://waitingfortax.com/2016/12/20/thats-one-ube...
VAT is paid by the end consumer though. If Uber UK is required to charge VAT on the taxi fair the fair will increase by 20%. It won't cost Uber a penny.

Eric Mc

121,784 posts

264 months

Saturday 11th March 2017
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It will in admin.

Collecting VAT, completing returns and submitting them is not a zero cost activity.

PurpleMoonlight

22,362 posts

156 months

Saturday 11th March 2017
quotequote all
Eric Mc said:
It will in admin.

Collecting VAT, completing returns and submitting them is not a zero cost activity.
Surely it's a just computer program with these big internet companies?

anonymous-user

Original Poster:

53 months

Saturday 11th March 2017
quotequote all
PurpleMoonlight said:
VAT is paid by the end consumer though. If Uber UK is required to charge VAT on the taxi fair the fair will increase by 20%. It won't cost Uber a penny.
True enough and, in an ideal world, I would level the playing field by making all transportation services such as taxis zero rated.

However, that is very unlikely to happen and it is, therefore, unfair for Uber to be able to undercut most other mini cab firms by 20% in this way, without the mechanism it uses to achieve that being proven to be legal.

ecs

1,222 posts

169 months

Saturday 11th March 2017
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PurpleMoonlight said:
Eric Mc said:
It will in admin.

Collecting VAT, completing returns and submitting them is not a zero cost activity.
Surely it's a just computer program with these big internet companies?
And 'computer programs' are free?

thebraketester

14,192 posts

137 months

Saturday 11th March 2017
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Heres an uber invoice.... to me this reads like I have not paid VAT.


Centurion07

10,381 posts

246 months

Saturday 11th March 2017
quotequote all
fesuvious said:
The reasons/problems extend where firms like this send an email to HMRC that says the following (and it could be any number of dodging entities);

Dear HMRC / Gov

We just thought we'd drop you a note to say that we're not too keen on paying certain taxes you'd like us to.

We're following a logic that given we now provide employment to 3500 people you can either suck up our tax arrangements or have us cancel operations in the UK and you can pay the benefits to them. Plus of course we'll hire PR so that the major news networks spin it so its the Gov's fault 3500 people are now unemployed.

No need to respond, we couldn't give a f@&k either way.

Yours Laughingly

Big Ass firm based in the Cayman islands.
This^.

IIRC this was the exact scenario that allowed Vodafone to pay a vastly reduced sum a few years back, by threatening to up sticks from the UK.

Centurion07

10,381 posts

246 months

Saturday 11th March 2017
quotequote all
JPJPJP said:
PurpleMoonlight said:
VAT is paid by the end consumer though. If Uber UK is required to charge VAT on the taxi fair the fair will increase by 20%. It won't cost Uber a penny.
True enough and, in an ideal world, I would level the playing field by making all transportation services such as taxis zero rated.

However, that is very unlikely to happen and it is, therefore, unfair for Uber to be able to undercut most other mini cab firms by 20% in this way, without the mechanism it uses to achieve that being proven to be legal.
I'm not 100% sure how Uber's whole arrangement works re: VAT.

IME very very few drivers are employees of a cab firm, they tend to be self-employed, therefore Uber wouldn't put their prices up 20% to cover the VAT they're supposed to be paying.

The lion's share of the fare goes to the driver and since he's unlikely to be VAT registered, any increase required to cover Uber's VAT will be quite small.

AIUI, Uber charge say 20% of a driver's total fares as a circuit fee. You, as the consumer, are paying the driver, albeit through Uber.

anonymous-user

Original Poster:

53 months

Saturday 11th March 2017
quotequote all
Centurion07 said:
I'm not 100% sure how Uber's whole arrangement works re: VAT.

IME very very few drivers are employees of a cab firm, they tend to be self-employed, therefore Uber wouldn't put their prices up 20% to cover the VAT they're supposed to be paying.

The lion's share of the fare goes to the driver and since he's unlikely to be VAT registered, any increase required to cover Uber's VAT will be quite small.

AIUI, Uber charge say 20% of a driver's total fares as a circuit fee. You, as the consumer, are paying the driver, albeit through Uber.
This is exactly what the case seeks to clarify.

The Employment Tribunal ruling (subject to appeal still) is that UK Uber drivers are workers (for Uber London Ltd). If that is the case, there is a reasonably logical (but as yet unproven in law) path to reach the point that says the rider books her ride with Uber. That is, that Uber is the supplier of the taxi service, which is standard rated for UK VAT.

Uber's defence is possibly (but it remains to be seen) that it simply acts as a booking agent for the drivers and that as that service is carried out in NL, the service provided can be zero rated for UK VAT and that individual drivers are responsible for UK VAT registration where appropriate for the provision of the actual taxi service.

PurpleMoonlight

22,362 posts

156 months

Saturday 11th March 2017
quotequote all
What's The Good Law Project's vested interest in this then?

Centurion07

10,381 posts

246 months

Saturday 11th March 2017
quotequote all
JPJPJP said:
Uber's defence is possibly (but it remains to be seen) that it simply acts as a booking agent for the drivers and that as that service is carried out in NL, the service provided can be zero rated for UK VAT and that individual drivers are responsible for UK VAT registration where appropriate for the provision of the actual taxi service.
Have to say I'm with Uber on this one.

I don't see how, as their driver's are all self-employed and pay a "circuit fee" to Uber, that they can be classed as anything other than a collection agent.

The entire fare is paid to the driver and HE pays Uber a "circuit fee" out of that. As a consumer, you are not paying Uber for anything, you are simply paying them the fare which gets passed to the driver and then HE pays Uber for the service they provide to HIM.

Instead of bleating about companies "taking advantage" of loopholes, people should be complaining to the govt. to get them closed!

Eric Mc

121,784 posts

264 months

Saturday 11th March 2017
quotequote all
Centurion07 said:
Instead of bleating about companies "taking advantage" of loopholes, people should be complaining to the govt. to get them closed!
Isn't that what this thread is all about?

hairyben

8,516 posts

182 months

Saturday 11th March 2017
quotequote all
fesuvious said:
The reasons/problems extend where firms like this send an email to HMRC that says the following (and it could be any number of dodging entities);

Dear HMRC / Gov

We just thought we'd drop you a note to say that we're not too keen on paying certain taxes you'd like us to.

We're following a logic that given we now provide employment to 3500 people you can either suck up our tax arrangements or have us cancel operations in the UK and you can pay the benefits to them. Plus of course we'll hire PR so that the major news networks spin it so its the Gov's fault 3500 people are now unemployed.

No need to respond, we couldn't give a f@&k either way.

Yours Laughingly

Big Ass firm based in the Cayman islands.
So, if uber upped sticks and got out the uk the market they cater to would go with them?