VAT AND PRIVATE HIRE SUPREME COURT REJECTS UBER’S APPEAL
A MAJOR WIN FOR THE PRIVATE HIRE SECTOR
A landmark judgment by the Supreme Court has ruled that private hire firms should not be forced to change their business models, a move which would have resulted in passengers being forced to pay VAT.
Uber had sought a legal declaration that would have added VAT to all private hire fares outside of London. Uber was seeking to render unlawful a model they had previously used up to 2022 until they lost a London- focused legal challenge.
But the move was successfully challenged by Liverpool- based Delta Taxis and private hire operator Veezu.
Delta argued that legislation dating back to 1976 allows for multiple business models under the private hire licensing regime, meaning not all operators are required to charge VAT. While Uber’s model does trigger VAT liability, the Supreme Court agreed that competitors can lawfully operate using alternative structures that do not.
The Supreme Court dismissed Uber’s appeal and confirmed that private hire firms are not legally required to adopt the same model – or contract directly with passengers. As a result, VAT will not be automatically added to fares, avoiding a potential 20%+ price hike across England and Wales.
The decision is being celebrated as a huge win for passengers, particularly the most vulnerable in society, and is a welcome reprieve for thousands of small private hire firms who would have faced huge costs and complexity if forced to apply VAT, many of whom wouldn’t have survived.
Layla Barke Jones, Dispute Resolution Partner at Aaron & Partners, which represented Delta said:
“This is a monumental decision, not just for DELTA, but for all private hire drivers and operators across England and Wales. Had this gone the other way, the cost and complexity of implementing VAT systems would have pushed many firms to the brink.
“This ruling ensures that operators can continue to operate under established, regulated models that have been in existence since regulation was introduced almost half a century ago - such as the agency model - without being forced into a ‘one size fits all’ model.”
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The ruling concludes a long-running case that’s been ongoing since March 2022, following an initial judgment in the High Court, where the judge found that a private hire operator is required to contract directly with the passenger for providing the journey.
However, that decision was overturned by the Court of Appeal in July 2024 which held that the licensing regime already provided for contractual liability for the operator without requiring operators to change their business models, in a case jointly brought by Delta Taxis and fellow operator Veezu. The Supreme Court ruling now cements the Court of Appeal outcome as the final say in law.
Nia Cooper, Chief Legal Officer at Veezu said:
“This decision is a triumph for the UK private hire sector. The unanimous verdict ends a three-year legal battle and confirms that operators can continue to choose which business model they adopt to run their business. Uber was seeking a declaration that would have resulted in 20% VAT being charged on all PHV fares.
Today’s outcome protects vulnerable passengers from crippling fare increases, avoids undue burdens on licensing authorities, maintains the status quo for licensed PHV drivers and allows the private hire sector to keep serving the people and places that rely on it 24/7. This ruling also shows that British- owned businesses can stand up against global giants that attempt to use litigation as a tactic to shape the sector to suit their business model.”
Layla Barke-Jones added:
“Private hire firms are vital in the communities, and are used frequently by those with disabilities, low-income households and older people who rely on taxis for essential journeys and to maintain their independence.
“If VAT suddenly had to be paid by all those people, the additional cost would have meant many simply choose not to travel at all, leaving some of the most vulnerable people in our society isolated.
“A crisis has been averted. This ruling protects the freedom to operate and the right of communities to access affordable, reliable transport.”
AUGUST 2025 PHTM
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