VAT TREATMENT OF PHVs


NPHTA members, Delta Taxis commented: “The only opposition to the case was from those who chose to get involved (what lawyers call “intervenors” in the case). Delta stood up to argue that licensing legislation should have no bearing on contract law, employment law or tax law. There is no crossover.


“Delta operated the exact same agency model for eight years prior to legislation (which was introduced in 1976) and for the 48 years since. The Act did not change our business model, nor did it criminalise it. Delta pointed out the Act was introduced to regulate for safe, comfortable transport, not to dictate how operators should structure their business or arrange contracts.”


how to collect the tax and account for it to HMRC if they choose to operate a model which has been used by the industry for over 48 years.


Passengers now, once again, have the freedom to choose between operators which use different models for their businesses. The ruling will not affect Uber, which will continue to charge VAT on fares, but will mean many smaller operators can continue to function as they have previously.


AARON & PARTNERS INVOLVEMENT


We acted on behalf of Liverpool-based operator Delta Merseyside, which spearheaded a group of Merseyside operators, who had hoped to protect passengers from such an impact by countering Uber’s latest court case.


The focus of the case from the operators’ point of view was the potential impact of the declaration which would make them responsible for the journeys that they accept bookings for. It is not only VAT that may have flown from the judgment, operators would have had their terms of business scrutinised, faced new licensing conditions and been responsible for any issues with the journeys they provide.


They would have been forced to change their business models which have been in operation since before the LGMPA 1976 even came in force, and suddenly told that it is incompatible with the Act but seemingly no one (including local licensing authorities) previously realised. If VAT must be charged, it is added to the fare paid by the passengers and passed to the Government. Delta’s stance in this case has been to try to protect the passengers and avoid the burden and risk of having to collect and account for the VAT.


PHTM AUGUST 2022


As we told newspapers, TV and radio at the time, we were disappointed at the outcome and took our time to consider and reflect upon the judgment, before submitting an appeal, which we’re delighted to learn has been successful.


WHAT THE COURT OF APPEAL DECISION MEANS FOR THE INDUSTRY


We firmly see the recent decision handed down by the Court of Appeal as a victory for the private hire industry and all those who depend on it. This was a landmark case, the result of which could have had a terrible impact on the lives of so many people – not to mention the administrative burden for operators.


The collective aim for us and our client in this case has always been to protect passengers and operators alike, so the news customers outside London won’t have to have VAT forced upon them will bring a collective sigh of relief.


Despite positive economic indications of late, everyone knows that the cost-of-living crisis has hit working families everywhere. The last thing anyone needed was yet another price hike.


Vulnerable consumers caught in the crossfire of Uber’s lawsuit rely on the services offered by operators. This frequently includes the disabled, elderly and low- income households. The Government recognised the potential impact of the initial High Court judgment by launching their consultation identifying that thousands of operators would need to change their operating model forcing them to now collect VAT from passengers.


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