A major blow to Uber – the Court of Appeal VAT ruling

Glyn Edwards, VAT Director at MHA says:

“Yesterday the High Court heard that the judgement in Uber v Sefton which rules that private hire firms taking bookings for drivers must act as principal (affecting any operator in England outside of Plymouth and London) has been overturned in forceful terms by the Court of Appeal.

This will be a major blow to Uber who saw the Sefton judgement as a way to level the playing field against competitor traditional private hire booking firms. The government’s current consultation on the issue arose from the High Court judgement, so that might also need to be re-thought.

It’s good news for traditional self-hire taxi firms which were in danger of being dragged into charging VAT on all journeys booked via them, even where the driver was paid directly by the customer. The judgement means that it will be the driver who provides the journey to passengers in most cases. As drivers tend to operate below the VAT registration threshold, no VAT will be due on those fares.

Uber will be very disappointed by the outcome, because their relationship with drivers means that it is Uber rather than the driver who provides the journey to the passenger.

The judgement should still be approached with care by self-driver taxi firms. Their individual arrangements with drivers and passengers should be reviewed to ensure that the contractual position is clear.”