UBER GIVEN PERMISSION TO APPEAL
large VAT bills despite not having actually received the VAT from the paying passenger.
Even those operators who can adapt their model will incur costs in administration and calculation that force the cost of journeys up and over the 20% that is paid to HMRC or otherwise the operator is squeezed yet further.
The outcome of the Supreme Court will have huge ramifications for the industry, and in particular those traditional operators who have already had to endure seismic changes with market disrupters entering the sector.
WHAT COULD THIS MEAN FOR DRIVERS:
WHAT COULD THIS MEAN FOR OPERATORS:
The government, through the comments in the recent consultation, has made clear that it will expect operators to charge and pay over VAT if Uber is successful at Supreme Court. The agency model will no longer be lawful according to the declaration that Uber seeks, meaning that operators who do not remodel will likely lose their licence and could even face sanctions.
The complexities of collecting VAT on all journeys has yet to be fully appreciated by the industry. App-based models may be able to adapt to changes more easily than traditional operators, who often do not collect the fares.
Those traditional operators will face significant difficulties and financial risks in calculating the VAT payable, having the drivers pass it on and then completing the VAT return to pay over the receipts. Any operator who cannot adapt their model will find they are on the hook for the VAT whether or not they were able to ultimately collect it from the passenger, meaning that operators could be landed with very
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For drivers too, the outcome of the Supreme Court will be a matter of great importance. Drivers will be the front line in calculating, collecting and paying over VAT in many cases (especially those where fares are paid in cash). The headache and hassle this will cause is not to be underestimated.
WHAT COULD THIS MEAN FOR PASSSENGERS:
Of course, those with a very keen eye on the next, and final, round of litigation will be the passengers; who may find themselves dealing with a catastrophe of driver shortages, operators dropping out of the market and fares going up by more than 20% to cover the costs of the tax and its administration.
CONCLUSION:
The arguments are well rehearsed at this point and the parties will fight it out before the top judges in the land. A decision is likely to be given in the second half of next year. It is yet to be seen how this one will end, but it will certainly be a very important case to monitor, debate and prepare for.
WATCH THIS SPACE.
The outcome of the Supreme Court will have huge ramifications for the industry.
PHTM DECEMBER 2024 ” 7
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