UBER v SEFTON MBC CASE
higher fares, they will use taxis less frequently, mean- ing both drivers and operators can expect to see cus- tomer demand drop and their earnings decrease as a result.
Traditional operators, whose drivers take payment in cash (or by card payable directly to the driver), will have to implement new systems, which will undoubtedly be more complex and labour intensive, to account to drivers for the VAT element of fares that drivers have been paid by customers that then needs to be paid by the driver to the operator, so that the operator can then pay that over to HMRC. Because this is likely to result in operators’ overheads increasing, they will be likely to have to take a bigger cut of each fare, meaning drivers get less or, more likely, fares have to go up even higher to cover the costs, which means even fewer customers will be able to afford to use taxis.
Or every operator will have to move to the ride hailing app model, at least to the extent of only accepting card payments made directly to the operator, so that they can collect and deduct at source the VAT and their share of the fare before finally paying the driver.
That might not sound so bad either, as there is already a move towards a cashless society, but let’s not forget that some of the most vulnerable people in society are those who still regard cash as being king, not least because they are unfamiliar and unsure of cashless technologies. They should not be put at risk of being unable to go shopping, to attend medical appointments or even just to visit family and friends.
If the High Court was to hold that operators must accept bookings as principal, this might have a bearing on the status of drivers – worker or self-employed. After all, it should not be forgotten that Uber has already lost that argument and now recognises all of its drivers as workers.
However, the ride hailing app companies, such as Uber, will be little affected because they do not face these issues (or have already faced them and lost). The customer books and pays by app and the payments to driver and HMRC are managed by the technology, so no increase to the costs of their overheads.
JUNE 2022
Uber’s efforts to make operators principals and to charge VAT on every fare may be most welcome by the govern- ment in view of the financial impact of the pandemic and the war in Ukraine. Uber might even hope that this will secure, with the current government, the political influence it once had in Prime Minister David Cameron and Chancellor George Osborne. But above all else, one can only imagine that it really hopes that such a change will anti-competitively decimate the traditional private hire trade, leaving it to exploit its ride hailing app dominance in the UK.
The importance of this case, which I believe to be the most significant case to face the traditional private hire industry since it first became regulated, is self-evident from the parties that have applied to the court to be joined in the proceedings – Bolt, Veezu, Delta and ADCU (App Drivers & Couriers Union) with Veezu and Delta between them speaking on behalf of another 40+ large and small opera- tors from across the country.
Having made its application to the court for an expedited hearing before any party had any realistic chance to apply to be joined in the proceedings or to oppose its applica- tion, Uber has persuaded the court that this case should be heard urgently, possibly before the end of July.
Whatever the High Court decides, it seems inevitable that the case will not end there. If Uber was to be successful, the risks to the traditional trade are so great that they would have to appeal. And if Uber were to be unsuccess- ful, it would have to appeal, not least because it seems impracticable for it to operate under different regimes in London and the provinces.
And finally, for those of you who want to know what I think the final outcome of this case will be, I’m afraid to say I’ve learnt never to predict such things, but what I can say is that the legislation that applies to London and the provinces is different and that there are, in my opinion, good reasons why the law may not be the same in London as in the rest of England and Wales.
Article by David Wilson Licensing Consultant, A2Z Licensing
TO BE CLEAR: THE VIEWS EXPRESSED IN THIS ARTICLE ARE THOSE OF THE AUTHOR AND ARE NOT NECESSARILY THOSE OF THE PUBLISHERS OF PHTM.
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