FUTURE UBER APPEALS, DRIVER VAT AND INDUSTRY IMPACT: Barke-Jones talks in detail about the landmark ruling appeal

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In a landmark decision, the Court of Appeal reversed a High Court ruling that required private hire vehicle operators to enter into contracts with customers when accepting bookings.

Last month, Veezu Holdings Ltd and Delta Merseyside Ltd successfully appealed against this ruling, which Uber Britannia Ltd opposed.

This decision holds substantial consequences for private hire operators, permitting them to maintain their existing business practices without the necessity of forming contracts with passengers at the booking stage. Consequently, this places the VAT liability on the driver, not the operator.

TaxiPoint caught up with Layla Barke-Jones, Dispute Resolution Partner at Aaron & Partners, who represented Delta Merseyside Ltd to ask more on the topic and what the impact of the appeal will mean to the industry.

Were you always confident of a successful appeal?

“The aim for us and our client in this case has always been to protect passengers and taxi operators alike, and we were confident that we were on the right side of the case, given our understanding and the practice that has been used by the trade for over 45 years. However, litigation is inherently unpredictable, and one can never be overly confident about the

outcome.”

How will this affect private hire operators licensed in London and elsewhere in England and Wales?

“The judgment makes it clear that it has no effect on operators in London at all, because PHVs in the capital are regulated by the Private Hire Vehicles (London) Act of 1998. However, for the rest of England and Wales (except Plymouth), where PHVs are regulated by Part II of the Local Government (Miscellaneous Provisions) Act 1976, the Court of Appeal judgment is a huge victory for the industry. It means that operators in those regions now have the freedom to choose how to set up their businesses (unlike in London). This includes the option to operate as agents for drivers. They will still be subject to the same regulations as operators who choose to contract directly with passengers, but this judgment does not force them to collect and account for VAT on all private hire fares.”

Is there likely to be any more legal action or appeals on this topic?

“It’s difficult to say, because that decision rests with Uber. They have been refused permission to appeal at the Court of Appeal but can still request permission from the Supreme Court. We anticipate that they will seek permission to appeal, and we should find out if that is the case by mid-August. Following this, there will be a period while the Supreme Court, the highest court in the land, considers whether it will allow Uber to present its case before it.”

Is there still a call being made for marginal or zero-rated VAT for those offering taxi and PHV services to help the drivers who remain VAT liable?

“Yes, there continues to be a call for these changes, especially from those in London and those using a business model that allows them to contract as principal. However, whether the Government will act on these calls remains uncertain, especially in light of the recently highlighted £20bn gap in the public finances.”