UBER VERSUS SEFTON: Landmark court ruling set to shape taxi and PHV sector announced today

A highly anticipated court decision, which could shape the future of the taxi and private hire vehicle (PHV) sector, will be delivered today.

The ruling in the case of Uber Britannia Limited v Sefton Metropolitan Borough Council & ORS, will have far-reaching implications for PHV worker rights and the business models of operators in England, excluding London.

The App Drivers and Couriers Union (ADCU) emphasised the gravity of the ruling, stating that the worker rights of drivers outside of London are ‘critically at stake’.

The court case, which commenced in November 2022, involves ride-hailing giant Uber challenging Sefton Council. If Uber's argument prevails, it could result in significant changes to the contractual relationships between operators and drivers in the private hire vehicle (PHV) industry, making all PHV operators responsible for VAT on fares. This change would inevitably increase the cost of journeys by up to 20 percent throughout England.

Following a protracted legal battle over workers' rights in London, Uber had to undertake substantial changes to its business model. The Supreme Court's ruling declared Uber as the "principal," which had sweeping implications for tax purposes, specifically forcing Uber to pay VAT on rides. In response, Uber implemented VAT charges on bookings in March 2022 which subsequently forced other private hire operators in London to follow suit at a later date.

Transport for London (TfL), the largest licensing authority in the UK, were forced to ask minicab operators to take immediate action to ensure compliance. This entailed making amendments to their terms and conditions and operating models to align with the new tax requirements.

With this latest legal action, Uber aims to bring uniformity to the industry nationwide by posing a question that would push all operators to pay VAT on journeys.

Industry stakeholders are eagerly awaiting Mrs Justice Foster‘s landmark decision that could have far-reaching consequences for the structure of PHV business models.