MINICAB VAT: Government still ‘carefully considering the impact’ of Uber verses Sefton judgment

The Government is ‘carefully considering the impact’ of the recent Uber verses Sefton Borough Council judgment that is likely to force private hire vehicle operators to VAT on all rides throughout England.

In a written parliamentary question, Daniel Zeichner MP questioned the Chancellor of the Exchequer regarding the potential impact of the recent Uber Britannia Limited v Sefton Borough Council judgment on the application of Value Added Tax (VAT) on hackney carriage taxi fares.

Responding to the query, Victoria Atkins, the Financial Secretary to the Treasury, clarified that the judgment in question specifically pertains to Private Hire Vehicle Operator (PHVO) services rather than traditional taxis.

Atkins explained: "The Uber Britannia Limited v Sefton Borough Council judgment does not apply to taxis; it solely concerns PHVO services. The current VAT regulations for PHVO fares remain unchanged. Fares have always been subject to VAT when provided by a VAT registered business operating as the service provider. The Government is carefully evaluating the implications this decision may have on the sector and its impact on passengers."

The landmark judgment does not extend its application to traditional taxis. This distinction is essential since conventional taxi services typically operate under different regulatory frameworks whereby the individual is the principal for VAT liability.

The clarification provided by the Financial Secretary to the Treasury seeks to relieve any anxieties surrounding the VAT application on taxi fares. In some sections of the media this month it was quoted that ‘taxi’ fares could rise 20%, when in fact taxi fares will not be affected at all.

The price on journeys offered by PHVO’s could however rise as they become principle in the booking of a minicab service. Most operators are likely to exceed the £85,000 VAT threshold limit on turnover making them liable.

The Government has said it acknowledges the significance of this decision within the PHVO industry and will carefully assess the ‘implications’ moving forward. The aim is likely to be a balance that ensures fairness for all stakeholders involved while also considering the needs and interests of passengers.