Discussion
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...
Here is a short introduction for anyone interested
https://twitter.com/goodlawproject/status/84048191...
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.
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
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 s
t 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. 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...
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...
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.
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. 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.
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.
Centurion07 said:
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!
Employment Tribunal disagrees with you - Uber drivers are workersI 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!
( https://www.judiciary.gov.uk/wp-content/uploads/20... )
Your description of the mechanics of how Uber works, in terms of payments made to where and by whom, is incorrect.
The link above contains a detailed description but, essentially, the rider pays Uber B.V. directly and elements of that money then make their way through other Uber entities on to other parties, including the driver.
My interest in this case is purely why getting the matter addressed requires a private case, rather than HMRC doing its job
Edited by anonymous-user on Saturday 11th March 14:47
Eric Mc said:
On what ground does it think it isn't liable to charge UK VAT?
Is Uber claiming that its UK turnover is less than £83,000?
Is it actually VAT registered in the UK?
Is it reclaiming VAT on its costs in the UK?
Or is it pretending it's not actually in the UK at all and has no income derived from its UK activity?
Uber's defence to the case (and indeed the detailed basis on which the case is being brought) isn't yet known.Is Uber claiming that its UK turnover is less than £83,000?
Is it actually VAT registered in the UK?
Is it reclaiming VAT on its costs in the UK?
Or is it pretending it's not actually in the UK at all and has no income derived from its UK activity?
Edited by anonymous-user on Saturday 11th March 14:44
Centurion07 said:
I haven't got time to wade through that! I'm a busy taxi driver. 
Synopsis?
I've never used Uber but was under the impression it works the same as when I have a customer that pays by card i.e. I use my firm's handset/software to take the payment which is passed onto me via the company. The customer hasn't paid my firm for a service but has paid ME to get them from A to B. How does Uber differ from this?
Synopsis: Uber is far more involved in the all aspects of the transaction than the situation that you describe at your company. It is hard to summarise a whole ET judgment in a single PH post, but this extract from it, section 92, goes some way to doing so.Synopsis?
I've never used Uber but was under the impression it works the same as when I have a customer that pays by card i.e. I use my firm's handset/software to take the payment which is passed onto me via the company. The customer hasn't paid my firm for a service but has paid ME to get them from A to B. How does Uber differ from this?
Similarities or differences between uber and mini cab firms are less important to the VAT position than the fact that the ET ruled as it did: that Uber drivers are workers.
Even if that judgment is overturned on appeal, the VAT question is still a valid one to ask on a number of other grounds
As Eric said a few posts ago, it will be interesting to see how it unfolds
Even if that judgment is overturned on appeal, the VAT question is still a valid one to ask on a number of other grounds
As Eric said a few posts ago, it will be interesting to see how it unfolds
havoc said:
Yes and no.
VAT is payable by the SELLER of services to HMR&C, if they exceed the turnover threshold. So the key, as you say, is who is the end-customer's contract with. But this is directly impacted by the nature of the Uber / driver relationship, as that determines whether Uber is only an agent, or is a de-facto employer of the drivers.
So:-
- If Uber is a mere agent and the taxi drivers are the SELLER, then your average sole-trader cabbie isn't registered and doesn't need to register for VAT. So no VAT chargeable to the punter or payable to HMR&C by the cabbie.
- If Uber is the employer and the cabbies are the employees, then Uber is compelled to charge VAT because its turnover is >£83k.
As pointed out above, Uber can't just throw their toys out of the pram and storm off to a tax haven as the market is here and the supply is here. So this should be a nice easy open goal for HMR&C now...I'm as confused as everyone else why they're not pushing it...
The employment tribunal ruled that uber drivers are workers and that the rider's contract is made with uber London ltd (in the case of the tribunal, it might be different outside London). Uber has reported U.K. Attributable Revenues of £115mVAT is payable by the SELLER of services to HMR&C, if they exceed the turnover threshold. So the key, as you say, is who is the end-customer's contract with. But this is directly impacted by the nature of the Uber / driver relationship, as that determines whether Uber is only an agent, or is a de-facto employer of the drivers.
So:-
- If Uber is a mere agent and the taxi drivers are the SELLER, then your average sole-trader cabbie isn't registered and doesn't need to register for VAT. So no VAT chargeable to the punter or payable to HMR&C by the cabbie.
- If Uber is the employer and the cabbies are the employees, then Uber is compelled to charge VAT because its turnover is >£83k.
As pointed out above, Uber can't just throw their toys out of the pram and storm off to a tax haven as the market is here and the supply is here. So this should be a nice easy open goal for HMR&C now...I'm as confused as everyone else why they're not pushing it...
Case should be launched soon enough and there will be something more to discuss then
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
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.
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.
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.
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