Blow for Uber VAT case as limit to costs is dismissed

A bid to limit costs in the case being brought against Uber has been dismissed by a judge, “handing corporations a massive advantage in future cases,” it has been claimed. The case now hangs by a thread, relying on the slim possibility of an appeal against the decision.

The Good Law Project and its director, Jolyon Maugham, say Uber supplies transport services which means it should be paying VAT and owes the HMRC around £1billion in tax and interest.

Maugham’s lawsuit, which he says is in the public interest, has been crowdfunded from the taxi trade. Last month he applied for a protective costs order (PCO) at £20,000, which would have limited the claimant’s exposure to Uber’s legal fees should he lose the case. It is feared that taking into account the hearing itself and possibly several appeals could send costs spiralling and make the case unaffordable. Unfortunately, the judge found that a PCO could not be obtained in “private law proceedings.” He also held that the fact that the taxi trade had contributed to the crowdfunding weighed heavily against the granting of a PCO, with particular reference being made to a £20,000 donation from an “anonymous” taxi source (who could that have been?).

Maugham said: “We have grave concerns about the implications of the decision. It is an invitation to private corporations to use the threat of costs liability to dodge legal accountability. It makes it difficult or impossible to hold them to account. It damages the rule of law. And these consequences, we believe, will further undermine popular consent to capitalism.

“Without a protective costs application the litigation cannot continue. However, this is not the end of the line – in its short life Good Law Project has already successfully overturned three decisions against it, including two on appeal. “We are seeking permission to appeal in this case and are seeking financial support for permission to appeal from other public interest actors. We are also urgently exploring an alternative route by which we might ensure HMRC does its job and Uber pays the £1bn in tax and interest we believe it owes.” Uber, does not dispute the figures claimed, but says it doesn’t need to pay VAT because it only matches drivers and passengers. However, Uber has recently agreed to pay VAT in Egypt. Also, despite the minicab company’s claims the EU ruled that it is in fact a transport service, not a digital one, in 2017. 

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