Taxi trade leaders push Chancellor to end TOMS tax advantage for ride-hail giants like Uber to raise extra £1billion in tax revenue
- Perry Richardson
- 10 minutes ago
- 2 min read
Taxi trade leaders have intensified pressure on the Treasury to close the Tour Operators Margin Scheme (TOMS) loophole that they say gives multinational ride-hail firms an economic advantage at the expense of drivers, passengers and the public purse.
In a detailed letter seen by TaxiPoint to Chancellor Rachel Reeves, the Licensed Taxi Drivers’ Association (LTDA) and senior Unite representatives warn that the current situation cannot continue. They write: “Multinational corporations are exploiting the Tour Operators Margin Scheme, a mechanism originally designed for traditional travel companies bundling services such as hotels and transport, not for private hire platforms.”
The authors, which included LTDA General Secretary Steve McNamara, Dave McCloud of Unite the Union Liverpool, Paul Landau of Unite the Union Leeds and Jim Kelly of London & Eastern Cab Section, challenge the claim made by lobbyists that the debate amounts to a “Taxi Tax” that they argue “is deeply misleading”. The letter says this is not an issue for working cab drivers but one for private hire operators using a structure never intended for their industry.
The letter goes on to set out the scale of the problem. It highlighted that Uber’s UK revenue hit billions last year, yet the company pays “an effective VAT rate of less than 5 per cent, compared to the standard 20 per cent paid by other major businesses.” According to the signatories, the Treasury loses more than £1 billion annually because ride-hail firms are permitted to continue using TOMS while the matter moves through the courts.
The background to the dispute stretches back years. TOMS was established for the travel trade, mainly holiday firms assembling packages of flights, transfers and accommodation. Once ride-hail platforms began arguing that they could also fall within that regime, HMRC challenged the interpretation. HMRC has consistently challenged this interpretation and the matter is now before the Court of Appeal.
The trade bodies say the Government must now settle the matter through legislation rather than wait for another lengthy round of litigation. They state: “This is a matter of principle and can only be addressed once and for all by legislative change.” The signatories add: “Large multinational companies operating in the UK should contribute their fair share to the Exchequer. Closing the TOMS loophole would not only uphold tax integrity but also protect livelihoods and ensure competition is based on service, not tax avoidance.”
The letter concludes with a direct request for action in the upcoming Budget. It argues that bringing private hire operators fully outside TOMS would create a consistent VAT position across the sector, ending what they view as an unfair structural advantage for the biggest app-based companies.
Uber has argued that it should only be taxed on its margin (its commission) rather than the full fare paid by the passenger. According to an analysis, under TOMS “it allows VAT to be charged only on the portion of each fare it retains as commission — not on the total cost of the ride.”
They point out that if they were treated as principal supplying the transport service (and taxed on the whole fare), their VAT bill would be much higher and could lead to fare rises or be passed onto passengers.
