High Court ruling could push Uber and other private hire fares up by 20% to cover VAT costs
Uber and other private hire operators may soon have to charge its customers 20% VAT on all rides taken in the UK after a recent High Court ruling, which could see the cost of minicab journeys spiral further.
The news follows yesterday's High Court judgment which ruled London private hire operators must make contracts with their customers, rather than the drivers on the platform.
The impact of the ruling has potentially far reaching consequences on the minicab industry. Sector representatives Licensed Private Hire Car Association (LPHCA) are to ‘consider the implications’ with their legal and accountancy teams before instructing its operator members on the next steps they should take.
Uber recently sought a declaration from the High Court that it is lawful for Uber’s drivers to continue to contract directly with Uber’s passengers for transport services. Uber had argued that its role was confined to that of an internet booking agent and that it was not a party to any contract for the provision of transport.
Lord Justice Males and Mr Justice Fraser handed down the ruling which private hire driver representatives, App Drivers and Couriers Union (ADCU), say the misclassification has been used to shield operators from employer liability, legal liability to their customers and for payment of VAT.
The ruling is likely to fundamentally restructure the private hire industry in London as almost all 1,832 TfL licensed operators have used this model of operation since the industry first came under regulatory supervision in 2002.
Passengers using private hire platform are likely to be dismayed at the news that prices could increase further after months of shortages and higher fares at peak-times. Licensed black taxi drivers, who work independently and not as a worker for an operator, will not be affected by the ruling and will not charge customers VAT for their services provided.
