Passengers using the controversial ride-hailing service Uber could be in line for a big price hike in fares, as HM Revenue & Customs confirms investigation into allegations that the minicab firm could owe more than £1billion in unpaid tax.
Since Uber arrived in the UK the firm has managed to dodge VAT on its fares, claiming that they provide a digital technology service to self-employed drivers rather than a transport service to passengers using workers as drivers.
HMRC are now investigating whether Uber is a transportation company and should therefore pay 20% VAT, or whether their drivers are to be treated as self-employed and not liable for VAT.
If HMRC find the American minicab app to be a transport company, they could find themselves with the biggest tax bill ever levied in the UK.
According to a HMRC spokesman via The Times: “HMRC will always make sure that every business, no matter its size, pays all the taxes due under UK law and we don’t settle for less. HMRC’s ability to assess for tax will always depend on the specific facts and circumstances of any case.”
In 2016 the GMB first took successful legal action against Uber, claiming drivers were not self-employed and should be entitled to minimum wage and holiday pay. The court’s judgment surmised Uber’s argument that drivers are "self-employed" as based on "fictions, twisted language and even brand new terminology".
Drivers on the Uber platform are still waiting to receive the rights found to be in their favour. Having lost three court appeals, Uber are now relying on a fourth forthcoming appeal at the Supreme Court to overturn the decision.
Just recently in official flotation documents, the San Francisco giants warned investors of the risk it may be classified as a transportation provider “requiring us to pay VAT (20%) on gross bookings both retrospectively and proactively”.
According to The Times it is believed that HMRC are investigating Uber’s potential VAT liability but has not yet reached any conclusions on the case.