HMRC risks paying Uber £1.3bn after court defeat

HMRC could beryllium forced to repay Uber £1.3bn aft losing a cardinal tribunal conflict implicit attempts to complaint VAT connected minicab fares.

The taxation authorization is astatine hazard of steep payments aft failing to overturn a ineligible ruling against Bolt, Uber’s Estonian rival.

This determination is apt to person implications for different ride-hailing apps, including Uber, which has been battling HMRC implicit the £1.3bn VAT measure it has been charged since 2022.

HMRC would person to reimburse Uber if the company’s ain ineligible challenge, made connected akin grounds to Bolt’s, is successful.

Uber, Bolt and different minicab apps were forced to alteration their ineligible exemplary successful 2022 aft a tribunal forced them to classify drivers arsenic workers alternatively than being self-employed.

The alteration meant the apps were classified arsenic the “principal” doing concern with passengers alternatively than a specified “agent” connecting them with drivers.

This made the companies liable for VAT. However, portion HMRC has insisted the 20pc taxation should beryllium paid connected the full fare, Uber and Bolt person insisted it should lone beryllium charged connected their fee.

Uber takes a 25pc chopped of fares, portion Bolt takes betwixt 15pc and 20pc.

Uber has paid HMRC hundreds of millions of pounds a twelvemonth successful VAT since the change, prompting them to motorboat an entreaty done the courts. That situation has been connected clasp until the result of the Bolt case.

Bolt won an archetypal triumph successful 2023 erstwhile the taxation tribunal ruled that “mobile ride-hailing services” should beryllium covered by the Tour Operators’ Margin Scheme, which covers businesses specified arsenic question agents and lone charges VAT connected what operators charge.

On Monday, HMRC’s entreaty astatine the Upper Tribunal of the Tax and Chancery enclosure was dismissed, though it is present considering a further situation successful the Court of Appeal.

A spokesperson said: “The Government is cautiously reviewing the tribunal’s determination and volition see adjacent steps.”

A Bolt spokesperson said: “We invited the court’s decision, which reaffirms that Bolt’s usage of the Tour Operators’ Margin Scheme is afloat compliant with UK taxation law.

“This is simply a triumph for the 100,000 driver-entrepreneurs that gain done our platform, and the millions of passengers that beryllium connected affordable and accessible transport.”

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