Discussion
Murph7355 said:
This.
The two key questions IMO and no one seems to be able to answer them.
If Uber's model is as described, then the answer to the first should be yes...unless of course the firm is set up in Luxembourg or Dublin or somewhere else where taxes such as UK VAT can be avoided (which is an entirely different issue).
The second one is altogether more interesting.
- Can anyone take a legal case against any company on its tax or other affairs?
- What if the Good Law Project win. Then what? What do they receive from it? What then happens?
Something doesn't feel right about that. Tax affairs should be between an organisation (and their delegates) and the HMRC. Everyone else should butt out. Not doing sounds like a recipe for disaster.
Maybe a case needs to be brought against the Good Law Project on whether it's interference is legal or not
The first question misses the point. This is about whether uber should charge vat to riders, not driversThe two key questions IMO and no one seems to be able to answer them.
If Uber's model is as described, then the answer to the first should be yes...unless of course the firm is set up in Luxembourg or Dublin or somewhere else where taxes such as UK VAT can be avoided (which is an entirely different issue).
The second one is altogether more interesting.
- Can anyone take a legal case against any company on its tax or other affairs?
- What if the Good Law Project win. Then what? What do they receive from it? What then happens?
Something doesn't feel right about that. Tax affairs should be between an organisation (and their delegates) and the HMRC. Everyone else should butt out. Not doing sounds like a recipe for disaster.
Maybe a case needs to be brought against the Good Law Project on whether it's interference is legal or not
The second question is a good one. Why isn't hmrc investigating? Does good law just want to prompt it to do so? Does Jo Maugham just want to get on telly more?? Let's see
hairyben said:
What point am I missing?
I thought Vodafone's point was they could pull their global HQ & assoc jobs out of the UK... the jobs uber facilitates are those of the cab drivers who'd do the same work for someone else as the fares would still require a ride, be it through uber/addisonlee/localcabco etc, which is why I use the word facilitate rather than provide. If tesco shut down we wouldn't stop buying groceries we'd go to sainsburys who'd enjoy increased market share and employ more people to cope. In fact many would argue the UK might be better off without uber, as the race-to-the-bottom model has turned reasonably decent pay jobs in terms of hackneys into low value jobs to the UK anyway.
This is the problem.I thought Vodafone's point was they could pull their global HQ & assoc jobs out of the UK... the jobs uber facilitates are those of the cab drivers who'd do the same work for someone else as the fares would still require a ride, be it through uber/addisonlee/localcabco etc, which is why I use the word facilitate rather than provide. If tesco shut down we wouldn't stop buying groceries we'd go to sainsburys who'd enjoy increased market share and employ more people to cope. In fact many would argue the UK might be better off without uber, as the race-to-the-bottom model has turned reasonably decent pay jobs in terms of hackneys into low value jobs to the UK anyway.
A hackney driver doesn't deserve such high pay, the pay is artificially inflated due to the huge amounts of ineffiencies in their business model.
A cab driver also isn't exactly a skilled job, lots of people have driving licences and have cars. The skill of knowing where you're going has been replaced by technology.
JPJPJP said:
...
The first question misses the point. This is about whether uber should charge vat to riders, not drivers
...
Not IMO.The first question misses the point. This is about whether uber should charge vat to riders, not drivers
...
If Uber are providing a service to drivers then they should be charging drivers for that service. And if Uber's income for that service is above the VAT threshold then they will be paying VAT on that. If they are paying VAT on that income then surely the argument evaporates.
I'm not convinced Maugham's arguments about what the website front pages say are especially strong, and the HMRC are certainly not predisposed to that sort of argument (they ignore even legal contracts at their whim, let alone semantics on a web page). Uber aren't providing the transport, nor do they have control over who provides the transport. That's between driver and passenger. The app is merely a service to connect the two that the driver, it would seem, pays for.
Murph7355 said:
Not IMO.
If Uber are providing a service to drivers then they should be charging drivers for that service. And if Uber's income for that service is above the VAT threshold then they will be paying VAT on that. If they are paying VAT on that income then surely the argument evaporates.
I'm not convinced Maugham's arguments about what the website front pages say are especially strong, and the HMRC are certainly not predisposed to that sort of argument (they ignore even legal contracts at their whim, let alone semantics on a web page). Uber aren't providing the transport, nor do they have control over who provides the transport. That's between driver and passenger. The app is merely a service to connect the two that the driver, it would seem, pays for.
I lean more towards the employment tribunal's interpretation - that the driver works for Uber and it is Uber with which the rider's contract is made. As that is the only time the Uber business model has been examined in a UK court, I don't think it is a bad place to start.If Uber are providing a service to drivers then they should be charging drivers for that service. And if Uber's income for that service is above the VAT threshold then they will be paying VAT on that. If they are paying VAT on that income then surely the argument evaporates.
I'm not convinced Maugham's arguments about what the website front pages say are especially strong, and the HMRC are certainly not predisposed to that sort of argument (they ignore even legal contracts at their whim, let alone semantics on a web page). Uber aren't providing the transport, nor do they have control over who provides the transport. That's between driver and passenger. The app is merely a service to connect the two that the driver, it would seem, pays for.
It isn't much of a leap from there (for me) to say that VAT should, therefore, be levied on the rider's fare.
AIUI from reading around, the VAT arrangement between Uber BV and drivers is dealt with properly (in a similar way to eBay fees for sellers are) with reverse charging etc. Even so, it is possible for Uber to charge both rider and driver to use the system and, if it does (as the ET says it does), then both service lines could be VATable
The detail of the case will be interesting (for me) to see. And, until Maugham launches the case, or maybe until Uber appeals the Emp Trib, we are just spinning our wheels here.
Edited by anonymous-user on Monday 13th March 18:04
PurpleMoonlight said:
Are Uber appealing the worker judgement?
If so it would seem sensible to wait for that.
Yes Uber is appealing the Employment Tribunal.If so it would seem sensible to wait for that.
Maugham thinks that the VAT issue could still be there even if the ET appeal is successful
However, as he points out on his blog: even armed with another QC's opinion that matches his "It is possible that my analysis is simply wrong"
We will know soon enough.
What about eBay/Paypal?
When you win an item on eBay, you (generally) pay for it through Paypal. Is your contract for that item with eBay, Paypal or the actual seller?
Yes, if there's an issue you have some sort of recourse through Paypal, but the actual contract is with the current owner of the item. Paypal are merely passing on your payment to the seller, much the same as I see Uber passing on the money to the driver.
Uber: passes money from the customer to the driver for the service provided by the driver. Driver pays Uber for that service.
Ebay: passes money from the customer to the seller for an item. Seller pays eBay for that service.
If I was Uber I'd be fighting it.
When you win an item on eBay, you (generally) pay for it through Paypal. Is your contract for that item with eBay, Paypal or the actual seller?
Yes, if there's an issue you have some sort of recourse through Paypal, but the actual contract is with the current owner of the item. Paypal are merely passing on your payment to the seller, much the same as I see Uber passing on the money to the driver.
Uber: passes money from the customer to the driver for the service provided by the driver. Driver pays Uber for that service.
Ebay: passes money from the customer to the seller for an item. Seller pays eBay for that service.
If I was Uber I'd be fighting it.
JPJPJP said:
I lean more towards the employment tribunal's interpretation - that the driver works for Uber and it is Uber with which the rider's contract is made. As that is the only time the Uber business model has been examined in a UK court, I don't think it is a bad place to start...
I'm afraid my faith in employment tribunals isn't as strong as yours...Murph7355 said:
I'm afraid my faith in employment tribunals isn't as strong as yours...
I share your lack of faith in ETs generally but, for now, it is the strongest legal position on the matterUber's appeal and the CJEU case linked to in this article will likely be more definitive
https://www.theregister.co.uk/2016/12/02/eu_court_...
Centurion07 said:
What about eBay/Paypal?
When you win an item on eBay, you (generally) pay for it through Paypal. Is your contract for that item with eBay, Paypal or the actual seller?
Yes, if there's an issue you have some sort of recourse through Paypal, but the actual contract is with the current owner of the item. Paypal are merely passing on your payment to the seller, much the same as I see Uber passing on the money to the driver.
Uber: passes money from the customer to the driver for the service provided by the driver. Driver pays Uber for that service.
Ebay: passes money from the customer to the seller for an item. Seller pays eBay for that service.
If I was Uber I'd be fighting it.
Uber is fighting itWhen you win an item on eBay, you (generally) pay for it through Paypal. Is your contract for that item with eBay, Paypal or the actual seller?
Yes, if there's an issue you have some sort of recourse through Paypal, but the actual contract is with the current owner of the item. Paypal are merely passing on your payment to the seller, much the same as I see Uber passing on the money to the driver.
Uber: passes money from the customer to the driver for the service provided by the driver. Driver pays Uber for that service.
Ebay: passes money from the customer to the seller for an item. Seller pays eBay for that service.
If I was Uber I'd be fighting it.
The Emp Trib's interpretation of Uber's business model is not at all like that of eBay / PayPal. A rider is seen (by the ET) as being very different from an eBay buyer and a driver as being very different to an eBay seller. Some reasons why are in the extract I posted earlier.
That could be proved wrong in the appeal.
Out of interest:
If that is so, it would in fact be illegal for them to make any charge to the Drivers...
- if Uber's UK Drivers are Workers; and
- if Uber are not a service provider to the Riders (i.e. they don't provide a cab service, but instead simply act to introduce the rider to the Workers)
If that is so, it would in fact be illegal for them to make any charge to the Drivers...
JPJPJP said:
I share your lack of faith in ETs generally but, for now, it is the strongest legal position on the matter
Uber's appeal and the CJEU case linked to in this article will likely be more definitive
https://www.theregister.co.uk/2016/12/02/eu_court_...
An ET is not charged with answering questions relating to a company's VAT position. Using an ET decision to assume a collateral position on another subject matter isn't automatically going to provide the right answer.Uber's appeal and the CJEU case linked to in this article will likely be more definitive
https://www.theregister.co.uk/2016/12/02/eu_court_...
janesmith1950 said:
An ET is not charged with answering questions relating to a company's VAT position. Using an ET decision to assume a collateral position on another subject matter isn't automatically going to provide the right answer.
I don't see an assumption. Which is why the VAT case has to be brought separately.As mentioned previously, Maugham points out that - in his opinion - even if the ET findings are over turned at appeal, his interpretation of the VAT position remains valid.
He does also entertain the notion that his analysis could be "simply wrong"
Anyway, not long to wait until the case is launched: "this week" apparently.
Then there will potentially be a bit more to chew over.
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.
If VAT is chargeable, all fares up to the point VAT is actually charged will be deemed to be VAT inclusive. That's a fair "cost" to Uber. VAT rules are fairly clearcut.
VAT has to be accounted for on chargeable products and services at every point of the supply chain. Regardless of whether uber describes itself as a digital service, agency or transport service it is liable to account for VAT on sales to the end customer when its turnover exceeds the threshold and regardless of the VAT status of its subcontractors or suppliers.
Why?
when you book a car through uber then uber provides the service by virtue of taking your money. Unlike ebay who charges seller fees to the seller, or paypal who purely act as a financial service uber has a contract with you to provide a transport service in return for payment. Your money is paid to uber directly, and uber is liable for refunds therefore your sales contract is with uber not the driver. if uber were acting as a booking agent you would pay the driver and the driver would pay there fees to uber. The equivelent of uber is apple or amazon; they sell things on behalf of their publishers and suppliers but your sales contract is with apple/amazon not the publisher. apple/amazon are liable for charging VAT on the retail price. Amazon already lost the case for selling goods using the lower luxembourg VAT rate as AFAIK the EU declared that goods and services even digital where consumed in the country of the buyer not seller which now requires all online companies to account and remit VAT to the country of the buyer - so they can no longer hide behind the NL wal for UK transactions.
In any case, EU VAT rules would still require them to charge VAT at the NL rate - intra-EU trade is not zero rated.
Having accounted for VAT on the sale then any suppliers should charge Uber VAT on their invoices - uber can then reclaim the vat paid to its suppliers against its liability leaving the VAT on its own commission as its liability. if its suppliers are not VAT registered then uber would be responsible for remitting the VAT on the full fee.
Regardless of its relationship with its subcontractors uber is clearly providing a service, therefore as they are the ones charging the consumer they are liable for follecting VAT since their service clearly exceeds 83k turnover.
There really is no exscuse for Uber not to pay regardless of them being a digital service or transport company - it is another tax wheeze from Travis 'the law doesnt apply to me'.
If its proven that uber have deliberately not complied with the rules, not only HMRC but every country where they operate will be able to claim back VAT due on all their historical dues, of course then can claim back input VAT but since most of their drivers aren't registered the bill to uber will be substantial as they can't retrospectively bill it to customers.
i'm surprised the VAT people werent all over this given they took out Amazons + apples luxembourg wheeze and rewrote the entire of VAT on digital services to make it liable in country of sale. If uber maintains they are a digital service as they did under the employment law then they will be treated like itunes + kindle and still liable for VAT on the full fare collected.
VAT has to be accounted for on chargeable products and services at every point of the supply chain. Regardless of whether uber describes itself as a digital service, agency or transport service it is liable to account for VAT on sales to the end customer when its turnover exceeds the threshold and regardless of the VAT status of its subcontractors or suppliers.
Why?
when you book a car through uber then uber provides the service by virtue of taking your money. Unlike ebay who charges seller fees to the seller, or paypal who purely act as a financial service uber has a contract with you to provide a transport service in return for payment. Your money is paid to uber directly, and uber is liable for refunds therefore your sales contract is with uber not the driver. if uber were acting as a booking agent you would pay the driver and the driver would pay there fees to uber. The equivelent of uber is apple or amazon; they sell things on behalf of their publishers and suppliers but your sales contract is with apple/amazon not the publisher. apple/amazon are liable for charging VAT on the retail price. Amazon already lost the case for selling goods using the lower luxembourg VAT rate as AFAIK the EU declared that goods and services even digital where consumed in the country of the buyer not seller which now requires all online companies to account and remit VAT to the country of the buyer - so they can no longer hide behind the NL wal for UK transactions.
In any case, EU VAT rules would still require them to charge VAT at the NL rate - intra-EU trade is not zero rated.
Having accounted for VAT on the sale then any suppliers should charge Uber VAT on their invoices - uber can then reclaim the vat paid to its suppliers against its liability leaving the VAT on its own commission as its liability. if its suppliers are not VAT registered then uber would be responsible for remitting the VAT on the full fee.
Regardless of its relationship with its subcontractors uber is clearly providing a service, therefore as they are the ones charging the consumer they are liable for follecting VAT since their service clearly exceeds 83k turnover.
There really is no exscuse for Uber not to pay regardless of them being a digital service or transport company - it is another tax wheeze from Travis 'the law doesnt apply to me'.
If its proven that uber have deliberately not complied with the rules, not only HMRC but every country where they operate will be able to claim back VAT due on all their historical dues, of course then can claim back input VAT but since most of their drivers aren't registered the bill to uber will be substantial as they can't retrospectively bill it to customers.
i'm surprised the VAT people werent all over this given they took out Amazons + apples luxembourg wheeze and rewrote the entire of VAT on digital services to make it liable in country of sale. If uber maintains they are a digital service as they did under the employment law then they will be treated like itunes + kindle and still liable for VAT on the full fare collected.
JPJPJP said:
You make the point which I think is most pertinent: why hasn't HMRC (&/or it's equivalents in other EU countries) already picked this up?
Big companies are, to a large degree, above the law.We've seen this many times in the USA - not only the taxation angle, but how rarely do Execs go to jail?
We're now seeing it over here - same issues.
It's only going to get worse, as the degree of 'sponsorship' of Ministers, either covertly or after-the-event overtly (Osborne's consulting contract?!?) is growing significantly.
Some people with knowledge of the machinations of VAT laws are saying that a recently published UTT decision adds weight to the argument that VAT should be charged on Uber fares
https://assets.publishing.service.gov.uk/media/58c...
H/T to @DanNeidle on twitter who picks out a relevant paragraph
https://assets.publishing.service.gov.uk/media/58c...
H/T to @DanNeidle on twitter who picks out a relevant paragraph
JPJPJP said:
Some people with knowledge of the machinations of VAT laws are saying that a recently published UTT decision adds weight to the argument that VAT should be charged on Uber fares
https://assets.publishing.service.gov.uk/media/58c...
H/T to @DanNeidle on twitter who picks out a relevant paragraph
...
Uber aren't the only supplier of "drivers" for the customer base (ie the public) though. There's no obligation on the customers to use only Uber, and within the Uber domain it's entirely down to the customer's discretion which driver they use.https://assets.publishing.service.gov.uk/media/58c...
H/T to @DanNeidle on twitter who picks out a relevant paragraph
...
I also thought the driver had some discretion on the fare, but that looks less so.
I suspect this will get very messy. And the tax code will gain another few hundred pages as a result. Win, win. For someone.
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