Is there a ‘Plan B’ for the PHV industry and their quest for 0% VAT?

Are there any proposed alternatives or compromises being considered by the Government or the ‘Stop the Taxi Tax’ coalition to mitigate the financial impact on consumers while addressing the VAT requirements?

The ‘Stop the Taxi Tax’ coalition have been trying to rally support against the proposed VAT increase on private hire fares. They have engaged in a series of lobbying efforts, public awareness campaigns, and are now hoping for direct discussions with policymakers to highlight the widespread opposition to the tax hike and its potential repercussions on affordability and safety.

In terms of potential compromises or alternatives to the VAT increase, there has been no specific mention of what these might entail. However, the Government's commitment to consult on the VAT treatment of Private Hire Vehicles in early 2024 suggests that there is room for discussion and possibly the exploration of solutions that could alleviate the financial burden on consumers while complying with tax regulations.

This consultation period may provide an opportunity for stakeholders, including private hire operators and consumer advocacy groups, to present viable alternatives that balance the need for tax compliance with the public's access to affordable transportation services. This might include a lower VAT tax rate than the 20% currently set in place.

The VAT requirements have changed following a recent High Court ruling in the case of Uber Britannia Ltd v Sefton MBC, which inadvertently triggered tax regulations requiring 20% VAT on private hire fares for the first time in the industry's history. This change has raised concerns among private hire operators across England, who have been lobbying for a 0% VAT status for PHV journeys.

Traditional taxis hailed off ranks and in the street will not be rising, their tariffs are set by local authorities and are not affected by the change in circumstances.