Uber's £500 Million Tax Tribunal: HMRC could be set to repay Uber huge amount in 2024
Updated: Dec 29, 2023
Uber Technologies Inc. is locked in a significant legal battle with His Majesty's Revenue & Customs (HMRC), which could see the ride-hailing giant reclaiming nearly £500 million in disputed tax payments.
The ongoing dispute centres around the application of Value Added Tax (VAT) to Uber's UK ridehail business.
Dispute Background:
The latest conflict surfaced in Uber's financial statement for Q2 2023, revealing a longstanding disagreement with HMRC since March 2022. HMRC had contested the method and amount of VAT application, leading to a hefty assessment of approximately £386 million ($487 million).
Under UK tax law, Uber had to pay this amount upfront to proceed with their dispute in the tax court, a move made in July 2023. This significant outlay followed an initial £615 million VAT bill settled in October 2022.
Potential Ripple Effects from Bolt's Tribunal Victory:
Uber's case is further complicated by a recent UK Tax Tribunal ruling in favour of Bolt, another ride-hailing firm. The tribunal exempted Bolt from paying VAT on the full value of each ride, asserting that Bolt is liable only for VAT on its 'marginal' earnings. This ruling counters HMRC's previous stance and is based on the Tour Operators Margin Scheme (TOMS), which taxes only the profit margin of resold services.
This decision is particularly relevant for Uber, as it suggests a similar outcome might be possible in their case, where the same VAT principles are at play.
Implications for the Ride-Hailing Sector:
The tribunal's decision may set a precedent within the ride-hailing industry, potentially affecting companies like Uber. The outcome of Uber's tribunal, slated for the first half of 2024, is eagerly anticipated as it could have significant financial implications for both the company and HMRC, as well as setting a legal precedent for the application of VAT in the sector.
