Updated: Oct 17, 2022
The Govenment has revealed that HMRC are ‘considering any implications’ that may arise from changes to VAT payable by potentially 16,000 private hire vehicle operators.
Private hire operators from across England are concerned about the implications of an Uber and Sefton Council court case that could drastically impact the sector.
If ride-hailing firm Uber are successful, the changes could force contractual arrangements with drivers and make all operators the principal for VAT on fares. This is likely to force the price of journeys up.
Uber have long urged thousands of other private hire operators to follow their lead by making changes to their business models. Earlier this year Uber made big changes which included paying VAT on all UK journeys following a similar court case in London.
Transport for London (TfL), the UK’s biggest licensing authority, warned ALL Private Hire (PH) Operators to take ‘IMMEDIATE ACTION’ to make changes to their terms and conditions and ensure compliance.
If Uber win their court case with Sefton Council, ALL licensing authorities outside of London could then be forced to follow suit.
In a House of Commons debate Daniel Zeichner, Labour MP for Cambridge, asked the Transport Minister whether she has had recent discussions with Cabinet colleagues on the potential impact of VAT levels on private hire operators.
Lucy Fraser, DfT Transport Minister, said: “I know the hon. Gentleman is a keen champion for this area, given that he is chair of the all-party parliamentary group on taxis. He will know that the question of whether a private hire vehicle operator needs to pay VAT depends on two factors: whether he is acting as principal or as agent; and whether he meets the VAT threshold. As he will also know, HMRC is responsible for VAT."
Zeichner responded: “There are 16,000 private hire operators across the country and an impending court case could change the complicated relationship between customer and operator. The worry is that if that change comes into effect, as a consequence of the court case, many small operators could be at risk. What plans does the Department have to deal with that contingency? Will the Minister agree to meet me and representatives of the industry to discuss that further?”
Frazer added: “I am aware of the litigation that he refers to. HMRC is considering any implications that that may have on VAT payable by private hire vehicle operators. As he will know, the Government keep all taxes under review at all times. I am sure that the Minister responsible for this area, Baroness Vere in the other place, will be happy to meet him.”