VAT AND PRIVATE HIRE
AFTER THE EXPO – A SUMMARY OF THE NEXT FEW MONTHS FOR VAT AND PRIVATE HIRE
Article by Jonathan Main VAT Partner MHA
I thoroughly enjoyed attending the PHTM EXPOand I am grateful as always to Graham and Liza for the opportunity to join a panel discussion with Nia Cooper from Veezu and Layla Barke-Jones from Aaron & Partners on the future of VAT in the private hire sector.
We discussed a number of complex and competing issues which may potentially affect the sector in the next 6-12 months. This article will help you keep track.
D.E.L.T.A. Merseyside Limited and another v Uber Britannia Limited
This case is due to be heard in the Supreme Court on 2 July. Uber is arguing that a PHVO which accepts a booking is required to contract as principal with the relevant customer, to fulfil that booking. If Uber succeeds, this judgment will closely mirror the Uber v Transport for London (“TfL) decision of the High Court in December 2021.
Uber appears to be using the Delta case to create a market in which all PHVOs are required to contract as principals. As the VAT treatment should follow the contract, this would mean PHVOs paying VAT on all fares, not just contract business.
While I understand that both Uber and Bolt pay VAT on all fares, the position is less clear for other operators in Greater London. It may be that HM Treasury (“HMT”) and HMRC are waiting for the outcome of the Delta case before deciding how best to deal with VAT across the sector and across the UK.
Watch this space for now. We will see the judgment at any point from late July, with the average wait being 1-2 months from a hearing in the Supreme Court.
6 HMT consultation
HMT, HMRC, and the Department for Transport launched a consultation on VAT in the private hire sector in April 2024. The consultation closed in August 2024. Buried in the Budget papers on 30 October 2024, HMT made the following statement:
“The government is considering the responses to the recent consultation on the VAT treatment of private hire vehicle services, as well as the impact of the recent Court of Appeal judgment, and will respond to the consultation in due course.”
The Court of Appeal judgment referred to above was the Delta case, released in July 2024. As we are still waiting, it is safe to assume that HMT is now waiting, like the rest of us, for the outcome of the Supreme Court hearing on 2 July.
There were several VAT proposals detailed in the consultation, including a zero-rate of VAT for private hire journeys, to mirror the treatment for coach, rail, ferry, and air transport. In my opinion, HMT favour a margin scheme. More on this below.
Again, for now watch this space. We are unlikely to see anything until late this year. It is possible that an announcement on the outcome of the consultation could be made in the Chancellor’s budget in late October or November.
The Bolt case
In the end this litigation may end up being overtaken by the Delta judgment in the Supreme Court and the result of the HMT consultation. I provided a detailed analysis of the Bolt case in the April edition of the PHTM magazine. In summary, Bolt has successfully defended its position that it should only be required to pay VAT on the profits earned on fares, rather than the full amount paid by the passenger.
The most significant facts of the case were summarised as follows in the decision of the Upper Tribunal.
JUNE 2025 PHTM
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