TAXING MATTERS
HMRC’S VAT CONSULTATION: A POLICY BUILT FOR PLATFORMS, NOT THE PRIVATE HIRE TRADE
Article by Gary Jacobs CEO Eazitax 020 8529 2600
www.eazitax.co.uk
The Government’s recent Budget and HMRC consult- ation on VAT and private hire services has sent a clear message to the largest ride-hailing platforms - but a far less clear one to the rest of the industry.
By removing access to the Tour Operators’ Margin Scheme (TOMS) for ride-hailers such as Uber and Bolt, HMRC has confirmed what many suspected: that it now sees these businesses as principals in the supply of transport rather than mere intermediaries. At the same time, the consultation briefly acknowledges that VAT applies to private hire fares in London following the Supreme Court decision in Uber v Aslam, the subse- quent Uber v ADCU case, and the later Sefton ruling.
What is striking, however, is not what the consultation says - but what it fails to address.
A policy built around Uber
The consultation reads as though it has been written almost exclusively with multinational app-based operators in mind. Uber and Bolt are name-checked, their operating models clearly understood, and their legal position effectively accepted as the benchmark.
That approach ignores a fundamental reality of the UK private hire market: the vast majority of London’s 1,300+ licensed operators do not operate like Uber.
Outside London in particular, most operators act as agents. They introduce passengers to self-employed drivers, take bookings, and in many cases never touch the fare at all. The contract for transport is between the passenger and the driver. The operator’s income is a booking fee or weekly rent, not the fare itself.
Yet HMRC’s consultation makes little attempt to grapple with this distinction. By focusing on the high- profile court rulings involving Uber, it risks imposing a tax framework designed for platform giants onto small and medium-sized operators, who operate under very different commercial and legal structures.
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The London problem – and the Sefton ripple effect
The situation is further complicated by the position in London.
Following Uber v ADCU, Transport for London made clear that operators licensed in the capital are responsible for the provision of the journey. The later Sefton case reinforced the view that where an operator accepts a booking, it is the principal in the supply of transport.
HMRC has taken this as confirmation that VAT is due on private hire fares in London.
What has not been properly addressed is how far that interpretation extends beyond London, or how it applies in cases where:
l the driver sets or collects the fare l payment is made in cash l the operator never receives the fare
l or the operator’s terms explicitly define them as an agent
For many operators, particularly outside TfL licensing, the suggestion that they are now liable for VAT on the full fare is not just unclear - it is commercially existential.
The unanswered question: cash fares
Perhaps the most glaring omission in HMRC’s response is the treatment of cash.
Thousands of private hire drivers, even in London, still accept cash payments. In these cases, the operator may never see the money, never process it, and never have visibility of the final fare beyond what is recorded for licensing or dispatch purposes.
If VAT is to be charged on the full fare: l who accounts for it? l how is it calculated? l how is it enforced?
l and how does an operator remit VAT on money it never receives?
JANUARY 2026 PHTM
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