Ride-hailing firm Uber is “defending itself vigorously” in an attempt to be exempt from paying VAT in the UK. In this year’s accounts published on 8 October, Uber London Limited (ULL) detailed their concerns, which included a possible £1billion tax bill to the Exchequer should the firm be classified as a ‘transportation’ company. The minicab app giants have always classified themselves as a software company which is exempt from the tax.
According to the accounts submitted, being classified as a transportation provider would result in 20% VAT on Gross Bookings or on the service fee that ULL charges the drivers, both retroactively and prospectively. The accounts filed state: “The Uber Group believes that the position of HMRC and the regulators in similar disputes and audits is without merit and is defending itself vigorously.” HMRC opened up an investigation into Uber’s tax classification in May. According to The TImes a HMRC spokesman said at the time: “HMRC will always make sure that every business, no matter its size, pays all the taxes due under UK law and we don’t settle for less. HMRC’s ability to assess for tax will always depend on the specific facts and circumstances of any case.”
The private hire operator also detailed further threats to its business which included claims and litigation surrounding classification of drivers as independent contractors.
ULL did however reveal revenue rose up to £68million, equating to a 15% rise from the previous year. In turn, profits jumped from £2.4million to £5.1million.