VAT AND PRIVATE HIRE VAT AND PRIVATE HIRE: WHAT DOES THE
GOVERNMENT CONSULTATION MEAN FOR ME? What is a consultation and why does it matter to me?
Article by Jonathan Main VAT and Indirect Taxes Partner, MHA Tel: 07760 166 802 or email:
jonathan.main@
mha.co.uk
Why should I read this?
This article deals with the latest development in the ongoing saga of VAT in the private hire market. It brings us right up to date with the Government’s publication of its consultation entitled “VAT Treatment of Private Hire Vehicles (“PHVs”)”.
The consultation was published on 18 April 2024 and remains open for responses for 16 weeks until 8 August 2024.
In previous PHTM articles I have provided extensive detail on points 1 – 5 below. Please read my articles in PHTM’s monthly newspapers for October and December 2023, and January 2024.
A short summary of the journey to this point:
1. Uber lost its appeal to the Supreme Court on worker status (Uber v Aslam and others). The decision was released in February 2021.
2. Uber lost its appeal to the High Court on licensing requirements in London (Uber v Transport for London (“TfL”) and others). The decision was released in December 2021.
3. Uber won its appeal to the High Court on licensing requirements in England and Wales (Uber v Sefton Council and others). The decision was released in July 2023.
4.HM Treasury announced a forthcoming consultation on the impacts of the July 2023 High Court ruling in Uber Britannia Ltd v Sefton MBC. This announcement was part of the Autumn Statement in November 2023.
5. Bolt won its appeal to the First-tier Tribunal on the VAT treatment of private hire revenue. The decision was released in December 2023.
6
A government consultation is open to businesses, trade bodies, and members of the public. Anyone with a vested interest can respond. The responses do not have to follow a set format and can cover some or all the questions raised in the consultation document. All responses are confidential. The government issues its response once
the
consultation period is closed but does not share the details of any individual submission. You can therefore comment to whatever extent makes sense to you without the concern of sharing confidential commercial information with your competitors.
Introduction section to this consultation
Section 2 of the consultation provides the Government’s summary understanding of the PHV market. It also sets out the limitations and timing of the process. The following points are particularly important:
• Government sees a difference between PHV transportation and “higher volume transportation services”. It feels that the zero-rate should incentivise services which reduce congestion and vehicle emissions.
• The consultation will only address the VAT treatment of agency work. This is confirmed in the following terms, “as private hire vehicle operators (“PHVOs”) have always accepted that they are principal in “account work”, the VAT treatment of this type of work will not change as a result of the High Court judgments. This consultation, therefore, does not focus on “account work””.
• As taxi and PHV policy is devolved in Wales, Scotland, and NI, any action that could be taken to reform PHV legislation to enable PHV drivers to contract directly with passengers is limited to England.
• The knock-on effect of the Sefton and TfL judgments is that VAT-registered PHVOs in England and Wales would need to charge VAT on all PHV passenger fares to reflect these judgments.
MAY 2024 PHTM
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