TIME TO ACT ON VAT
Article by Nia Cooper Chief Legal Officer
www.veezu.co.uk
It’s a few months into 2025, and time has flown by. As we hopefully enter a period of better weather and longer nights that encourage people to stay out later, demand for private hire services will start to increase. This is good news for us all. But as the seasons change, the issue of uncertainty concerning VAT on fares still looms over the sector. The Government has yet to publish its response to its consultation on the VAT Treatment of PHV Fares and the pending Uber v Sefton Supreme Court hearing could yet create significant damage to the sector.
I have often written in PHTM about the need for the sector to unify to lobby Government to address the VAT issue. I was very pleased that a letter which Veezu recently initiated gained 51 signatures (at the time of publication) from operators across the entire UK. This letter set out the urgent need for His Majesty’s Treasury to act on the VAT consultation now. It was sent to the Chancellor of the Exchequer ahead of the spring statement and made three key points if no action is taken. We will see:
l Higher fares for consumers – an additional 20% VAT means piling pressure on those already struggling with the cost of living, particularly those disabled and vulnerable passengers who rely on PHV as their only mode of transport.
l Reduced driver earnings –higher fares will reduce demand, leaving many self-employed, entre- preneurial drivers with fewer trips and lower take-home earnings, significantly impacting the livelihoods of 265,000 licensed drivers and driving them out of the industry.
l A postcode lottery for VAT – VAT is already being applied differently depending on business models and geography. This will be exacerbated without a clear policy on the treatment of VAT across the sector.
I would like to thank all those operators who supported the letter, and we look forward to working together again soon.
Unfortunately, we 14 have not seen any further announcements concerning the VAT consultation in
the Chancellor’s spring statement. We will continue to lobby Government to keep this important issue at the top of their agenda and update the sector on any changes or progress. What is vitally important at this stage is that we all continue to lobby our local MPs, local councillors, business groups, passenger safety groups and anyone impacted by a 20% hike in fares to apply pressure to the Government to act on VAT.
The other area of collaboration across the sector has been the Crowdjustice fund raiser launched earlier in March to support Delta taxis with the significant costs associated with fighting the Uber v Sefton case at the Supreme Court. Legal cases are expensive, particularly when they get to the Supreme Court stage. Costs in this case, as it has gone through the High Court and Court of Appeal, have already exceeded £1m. Veezu has been keen to support Delta as it aims to raise £500,000 to continue the fight against Uber.
We’re all impacted by the potential fallout from this case. If Uber is successful, and Government does not act on VAT, then we could see 20% added to PHV fares. This will impact on passengers, self-employed drivers and local communities alike. With almost 50% of PHV used for essential journeys, such as hospital appointments and commuting, the impact on everyday passengers and vulnerable people will be more acute.
I would encourage you to contribute to the crowd- funder to support Delta in this case. You can contribute to the fighting fund here:
https://www.crowdjustice.com/case/protectfares/
Finally, at 1pm on Wednesdaqy 14 May, I will join Layla Barke-Jones, Partner at Aaron and Partners LLP, and Jonathan Main, VAT and Indirect Taxes Partner at MHA, at the PHTM EXPO to discuss the major issues facing the PHV sector. We will focus on the current VAT consultation and the need for action, the upcoming Uber v Sefton Supreme Court case and its numerous ramifications, and the recent decision by the Upper Tribunal of the Tax and Chancery chamber to reject HMRC’s appeal to block ride sharer Bolt applying the Tour Operators Margin Scheme (TOMS) to its fares.
Please come along to the PHTM EXPO to hear this discussion and ask questions. There is a lot going on in the sector at the moment and this is your chance to find out how these events may impact you and your businesses going forward. It is also a chance to join the wider lobbying efforts so that we can ensure Government acts in the best interests of the entire sector.
APRIL 2025 PHTM
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