Discussion
The Mad Monk said:
Does this mean that minicab firms up and down the country have now got to start giving holiday pay to their drivers?
If it's endemic then I hope so. Why not? Why should you put in long hours, suffer abuse from customers so your boss can take it in. I hate the term gig economy. 'empowering driver's (with no rights)' as Ubers bods put it made me cringe.Nice artice. Obviously Uber will keep appealing till some sort of submissive legal system is in place but you can only hope the winds of change are blowing the other way.
Will be nice to see all those PPI adverts replaced by one's offering to represent the 'sweated labour' from all these
crummy organizations.
http://www.independent.co.uk/news/business/news/ub...
Will be nice to see all those PPI adverts replaced by one's offering to represent the 'sweated labour' from all these
crummy organizations.
http://www.independent.co.uk/news/business/news/ub...
I am not sure what you mean by a submssive legal system. Uber has to take its chances in the Court of Appeal, and Supreme Court if the case gets that far, both of which are independent.
The drivers in this case were represented by Bates Wells & Braithwaite, a good and socially responsible law firm.
The drivers in this case were represented by Bates Wells & Braithwaite, a good and socially responsible law firm.
Breadvan72 said:
A firm will have more obligations to the drivers if they are classed as its workers. If the firm is just providing a customer introduction service then it will have fewer obligations to the drivers.
That's what every minicab firm I ever encountered does, although I suppose it depends what you mean by 'customer introduction service'. These days hi - automation means that customers contact an automated booking service to 'order' a car. Their job appears on a PDA which the driver hires from the minicab firm which is how the firm makes its money. It is up to the driver what happens next, and fares/tips are paid directly to the driver. It's his money, not the firm's. This includes 'contract work' which some drivers opt not to do. In this case the fare is paid to the company's account but repaid to the driver without deduction. All kinds of drivers opt out of all kinds of work including deciding who they will/won't take in their cars and when they'll work or not work. It's known as 'open-shifting'. Holidays are taken whenever they want. Some take months off, and simply book back in when they return.
It really couldn't be more self employed if it tried.
Uber operates very differently. They take the fare money and pay the driver minus their 'cut'.
Edited by drainbrain on Friday 10th November 18:56
Maugham is getting some mileage out of it
Here he is baiting Uber's communications guy about an upcoming to appearance
https://twitter.com/jolyonmaugham/status/929048408...
Here he is baiting Uber's communications guy about an upcoming to appearance
https://twitter.com/jolyonmaugham/status/929048408...
The Mad Monk said:
JPJPJP said:
Uber has lost the appeal against the employment tribunal decision
https://assets.publishing.service.gov.uk/media/5a0...
Does this mean that minicab firms up and down the country have now got to start giving holiday pay to their drivers?https://assets.publishing.service.gov.uk/media/5a0...
Edited by JPJPJP on Friday 10th November 11:11
Alpinestars said:
Plenty of case law around what makes an employee versus self employed. How much command and control, provision of own equipment, ability to maximise profits, are important factors.
For example, a recent one (published 25 Sep 2017) featuring Addison Lee https://www.leighday.co.uk/LeighDay/media/LeighDay...
ETA a summary in case that link is tldr
https://www.leighday.co.uk/News/News-2017/Septembe...
A further update from Maugham
https://goodlawproject.org/uber-key-hurdle-crossed...
tldr?
The High Court case is postponed in favour of first pursuing the tax tribunal route based on his attempt to reclaim the VAT on the 'test' fare.
https://goodlawproject.org/uber-key-hurdle-crossed...
tldr?
The High Court case is postponed in favour of first pursuing the tax tribunal route based on his attempt to reclaim the VAT on the 'test' fare.
I am starting to think that the tax tribunal route is actually better for the case than the HC would be anyway (costs aside).
AIUI (and please correct me if I am wrong, which isn't unlikely), the HC case would quite narrowly focus on the specific issue of the case:
Should Uber issue a VAT receipt for the fare in question?
With Uber mounting a fairly blunt response that says No, it is down to the driver
That may, or may not, lead to various appeals etc. but wouldn't, I don't think, go much further in that first court.
The tribunal route doesn't even directly involve Uber in the proceedings. It is Maugham appealing and HMRC responding.
I can see ways for that to open up the possibility for a much fuller examination of the reasons why Maugham thinks he should be allowed to reclaim the VAT on the fare; to examine the reasons why HMRC has not waived the requirement to hold a VAT receipt in order to make that claim and to explore the reasons why HMRC doesn't think Uber should be charging VAT on fares.
Anyway, Maugham intends to file his appeal to the tribunal this week. Let's see.
AIUI (and please correct me if I am wrong, which isn't unlikely), the HC case would quite narrowly focus on the specific issue of the case:
Should Uber issue a VAT receipt for the fare in question?
With Uber mounting a fairly blunt response that says No, it is down to the driver
That may, or may not, lead to various appeals etc. but wouldn't, I don't think, go much further in that first court.
The tribunal route doesn't even directly involve Uber in the proceedings. It is Maugham appealing and HMRC responding.
I can see ways for that to open up the possibility for a much fuller examination of the reasons why Maugham thinks he should be allowed to reclaim the VAT on the fare; to examine the reasons why HMRC has not waived the requirement to hold a VAT receipt in order to make that claim and to explore the reasons why HMRC doesn't think Uber should be charging VAT on fares.
Anyway, Maugham intends to file his appeal to the tribunal this week. Let's see.
The Public Accounts Committee asked HMRC management about the Uber situation last week.
Jon Thompson, Chief Executive and Permanent Secretary
Jim Harra, Director General, Customer Strategy and Tax Design,
Has Maugham addressed the the principal-agent case law?
Jon Thompson, Chief Executive and Permanent Secretary
Jim Harra, Director General, Customer Strategy and Tax Design,
PAC oral evidence said:
Q88 Shabana Mahmood: An employment tribunal recently found that Uber is supplying transportation services, the result of which is that VAT should be payable on all its transactions. In normal practice, we would assume that HMRC would raise a protective assessment, in order to protect any revenue that should be payable if that decision stands; the decision will obviously be subject to appeal and further legal proceedings. It is my understanding that HMRC has not raised a protective assessment in relation to Uber. Can you explain whether that is the case, and if it is, why?
Jon Thompson: Sure. Let me lead off and then see if Jim wants to add. Again, I am sorry about this, but we cannot talk about that specific taxpayer under the 2005 Act. I know that is frustrating.
Q89 Chair: We understand, but hypothetically?
Jon Thompson: Let me generalise and go to what is a systemic question here. The systemic question is about who the agent is and who the principal is in the transaction between a customer and two other parties. We tested this back in 2014 in a case against a website called Secret Hotels. We actually lost that case, because we argued that the website was indeed the principal, and was therefore responsible for VAT. It won the case and came out as the agent.
Since 2014, we have tested that five times in the courts, to try to establish that what appears to be the organisation that the customer is dealing with is actually the principal. On all five occasions since 2014, we have lost. We have tried six times to establish that the agent is actually the principal, and is therefore responsible for VAT.
We continue to monitor at least two further developments: one is the one you mentioned, the other is that there have been some EU cases in this field. They may change the situation and the advice to us. We are in conversation with counsel about this issue. Consumers use their smartphone or iPad or whatever and interact with a website or whatever, thinking that their contract is with that organisation, but it actually turns out it is not, and that the organisation is an agent for the principal. We will continue to test this.
We will monitor the two ongoing legal cases; depending on how they land, we will take further counsel’s opinion and we will test it again. You talked about one taxpayer, but there is a vast array of these intermediary agent organisations. I am being transparent with you: we have tried six times in the last three years to prove that they are the principals and we have lost.
Q90 Chair: Do you need a change in the law?
Jon Thompson: Possibly; I may need to defer to Jim.
Jim Harra: European VAT law determines who has to pay the VAT, so it is not something the UK could change by itself at this time. However, I think it is certainly something that we have been analysing, with our European partner tax authorities, across a whole new sector—not just Uber—as Jon mentioned. We await with interest the outcome of the cases. None of them are tax cases: one is an employment case, one is a regulatory one.
However, having seen the Advocate General’s advice in the regulatory cases involving some French and Spanish cities, if the European Court chooses to adopt what the Advocate General has advised, it might have implications for the precedent of that Secret Hotels case and might create some new avenues of argument for us. We can only make assessments on taxpayers based on our best judgment of the law and based on advice, otherwise they just get overturned. We keep monitoring the situation and we will look for the outcome of those cases.
Q91 Shabana Mahmood: Thank you. What you say about the number of times we have tested the position, in relation to principals and agents, in the courts is helpful. My question was really driving at what is stopping you from putting forward a protective assessment, which does not oblige you to collect that tax. This is a developing picture and there will be more legal cases, but there is a four-year time limit on VAT payments, so why not just raise an assessment and see how things play out?
Jim Harra: I appreciate that there are time limits. We do not have absolute discretion to raise assessments. The law says we can only raise them if our best judgment is that the tax is due. We have been taking advice on these cases and, as Jon says, we have now fought and lost a significant number. Our advice is that the law in this area is reasonably clear unless and until it is changed, for example by one of the cases that you have mentioned. We raise assessments where we think we can, but we cannot just raise them we want to.
Q92 Shabana Mahmood: So your position is that the employment tribunal decision, specifically in relation to Uber, does not change the advice you have been given about the basis on which you should put forward a protective assessment?
Jim Harra: The employment tribunal decision—which is under appeal, so we will see where that goes—relates to the status of the drivers and whether they are self-employed, workers or employees. I believe that tribunal has ruled that they are workers for the purposes of workers’ rights. I am not aware that the tribunal made any ruling regarding principal and agent, which is what is critical to VAT law, not the workers’ rights. Given that there is a Supreme Court decision, an employment tribunal would not be able to overturn that precedent anyway. We would have to see that go through the courts.
http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/public-accounts-committee/hmrcs-performance-in-201617/oral/73093.htmlJon Thompson: Sure. Let me lead off and then see if Jim wants to add. Again, I am sorry about this, but we cannot talk about that specific taxpayer under the 2005 Act. I know that is frustrating.
Q89 Chair: We understand, but hypothetically?
Jon Thompson: Let me generalise and go to what is a systemic question here. The systemic question is about who the agent is and who the principal is in the transaction between a customer and two other parties. We tested this back in 2014 in a case against a website called Secret Hotels. We actually lost that case, because we argued that the website was indeed the principal, and was therefore responsible for VAT. It won the case and came out as the agent.
Since 2014, we have tested that five times in the courts, to try to establish that what appears to be the organisation that the customer is dealing with is actually the principal. On all five occasions since 2014, we have lost. We have tried six times to establish that the agent is actually the principal, and is therefore responsible for VAT.
We continue to monitor at least two further developments: one is the one you mentioned, the other is that there have been some EU cases in this field. They may change the situation and the advice to us. We are in conversation with counsel about this issue. Consumers use their smartphone or iPad or whatever and interact with a website or whatever, thinking that their contract is with that organisation, but it actually turns out it is not, and that the organisation is an agent for the principal. We will continue to test this.
We will monitor the two ongoing legal cases; depending on how they land, we will take further counsel’s opinion and we will test it again. You talked about one taxpayer, but there is a vast array of these intermediary agent organisations. I am being transparent with you: we have tried six times in the last three years to prove that they are the principals and we have lost.
Q90 Chair: Do you need a change in the law?
Jon Thompson: Possibly; I may need to defer to Jim.
Jim Harra: European VAT law determines who has to pay the VAT, so it is not something the UK could change by itself at this time. However, I think it is certainly something that we have been analysing, with our European partner tax authorities, across a whole new sector—not just Uber—as Jon mentioned. We await with interest the outcome of the cases. None of them are tax cases: one is an employment case, one is a regulatory one.
However, having seen the Advocate General’s advice in the regulatory cases involving some French and Spanish cities, if the European Court chooses to adopt what the Advocate General has advised, it might have implications for the precedent of that Secret Hotels case and might create some new avenues of argument for us. We can only make assessments on taxpayers based on our best judgment of the law and based on advice, otherwise they just get overturned. We keep monitoring the situation and we will look for the outcome of those cases.
Q91 Shabana Mahmood: Thank you. What you say about the number of times we have tested the position, in relation to principals and agents, in the courts is helpful. My question was really driving at what is stopping you from putting forward a protective assessment, which does not oblige you to collect that tax. This is a developing picture and there will be more legal cases, but there is a four-year time limit on VAT payments, so why not just raise an assessment and see how things play out?
Jim Harra: I appreciate that there are time limits. We do not have absolute discretion to raise assessments. The law says we can only raise them if our best judgment is that the tax is due. We have been taking advice on these cases and, as Jon says, we have now fought and lost a significant number. Our advice is that the law in this area is reasonably clear unless and until it is changed, for example by one of the cases that you have mentioned. We raise assessments where we think we can, but we cannot just raise them we want to.
Q92 Shabana Mahmood: So your position is that the employment tribunal decision, specifically in relation to Uber, does not change the advice you have been given about the basis on which you should put forward a protective assessment?
Jim Harra: The employment tribunal decision—which is under appeal, so we will see where that goes—relates to the status of the drivers and whether they are self-employed, workers or employees. I believe that tribunal has ruled that they are workers for the purposes of workers’ rights. I am not aware that the tribunal made any ruling regarding principal and agent, which is what is critical to VAT law, not the workers’ rights. Given that there is a Supreme Court decision, an employment tribunal would not be able to overturn that precedent anyway. We would have to see that go through the courts.
Has Maugham addressed the the principal-agent case law?
ninja-lewis said:
http://data.parliament.uk/writtenevidence/committe...
Has Maugham addressed the the principal-agent case law?
Looks to explain why HMRC haven't taken Uber on with this.Has Maugham addressed the the principal-agent case law?
Without a change in the law, how many times should HMRC be expected to go through the courts (at tax payers' expense) and lose? 6 times and losing them all seems pretty emphatic. Do we just hope to find a judge on an off day? Or maybe one who once needed a receipt and didn't get one
In another part of the gig economy, Deliveroo persuaded the Central Arbitration Committee, the body that decides on union recognition, that Deliveroo riders are self employed. This could be challenged in the High Court.
http://www.bbc.co.uk/news/business-41983343
http://www.bbc.co.uk/news/business-41983343
Maugham has published the letter from HMRC that he intends to use as the platform from which to launch the tax tribunal appeal
https://twitter.com/JolyonMaugham/status/930067935...
https://twitter.com/JolyonMaugham/status/930067935...
The interesting thing here is that it looks like governments all over the place have been caught on the hop by new ways of doing business. I suspect technology has a big part to play, being able to move business resources around quickly and, to an extent, operate from anywhere they like.
It'll be even more interesting to see how the likes of HMRC react. They evidently feel they should be getting more income from firms, but the law as it stands is precluding that.
I wonder whether this will ultimately lead to VAT thresholds dropping/being abolished altogether....I can see the end consumer loving that sort of unintended consequence.
It'll be even more interesting to see how the likes of HMRC react. They evidently feel they should be getting more income from firms, but the law as it stands is precluding that.
I wonder whether this will ultimately lead to VAT thresholds dropping/being abolished altogether....I can see the end consumer loving that sort of unintended consequence.
Breadvan72 said:
Governments are partly to blame for encouraging a business culture that exploits low paid workers.
Given that there are so many hundreds of millions of people around the world receiving less than a $1 a day, any case for higher paid workers in some countries can only be built on sandJPJPJP said:
Breadvan72 said:
Governments are partly to blame for encouraging a business culture that exploits low paid workers.
Given that there are so many hundreds of millions of people around the world receiving less than a $1 a day, any case for higher paid workers in some countries can only be built on sandWhere the output is readily exportable (e.g. textiles) then you have a point. But where it is difficult to transport (e.g. bulk, perishable...), difficult to export (regulations, desire for proximity...), or requires a face-to-face service (restaurants, taxis...), then it doesn't apply - straightforward supply and demand, where the barriers to entry on supply prevent imports.
You also need to look at the cost of living in the respective countries - the argument "I should only pay you $1 a day because that's the average wage in the Democratic Republic of Somewherestan" is utterly fallacious if the typical cost of housing in DRS is $0.20 a day, vs e.g. $25 a day in the UK.
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