Crisis-hit Uber could be liable for a £1.5 BILLION unpaid VAT bill as campaigners file appeal against US firm that could lead to higher fares
- The Good Law Project won a case against HMRC on Uber’s VAT tax liabilities
- But Uber appealed the decision before HMRC was forced to make the disclosure
- The Good Law Project filed documents to have Uber’s own appeal thrown out
- The car-sharing giant could now be on the hook for £1.5billion in unpaid VAT
- Uber argues the driver is liable for VAT on any rides rather than the company
An epic court battle against Uber took another twist as the car-sharing giant came a step closer to being liable for a potential £1.5billion in unpaid VAT.
The Good Law Project won a case against bosses at HM Revenues and Customs who must now reveal whether the agency has assessed Uber’s VAT tax liabilities last month.
But Uber subsequently filed an appeal against the decision before HMRC would have been forced to make the disclosure.
The Good Law Project, run by Jolyon Maugham QC (above), filed documents with the Court of Appeal on Monday to have Uber’s own appeal urgently thrown out
On Monday the Good Law Project, which is run by anti-Brexit campaigner Jolyon Maugham QC, filed documents with the Court of Appeal to have Uber’s own appeal urgently thrown out.
Mr Maugham told the PA news agency: ‘The more time passes without an assessment being raised the more VAT is lost – forever.
‘Whatever costs Uber run up pursuing a hopeless appeal will be dwarfed by the £4m or so lost every week if no assessment is raised. We hope and expect the Court of Appeal to give this ruse the short shrift it deserves.’
The Good Law Project initially attempted to take Uber to court to force them to disclose their tax affairs, but attempts for a protective costs ruling failed, making the case unviable financially.
Instead, the group took HMRC to court demanding the taxman assess Uber for VAT liabilities. It calculates that Uber could be on the hook for £1.5 billion.
HMRC had previously claimed it had made no assessment, but once the court case was launched, it declined to confirm whether the position had changed or not.
Uber argues that because it is a platform that brings drivers and riders together, rather than a transport business, it is the driver who is liable for VAT on any rides rather than the company. Uber also claims it acts as a ‘middleman’ between self-employed drivers and customers.
However, the description Uber gives of its relationship with its drivers has been called out by judges for involving a ‘high degree of fiction’ when in December last year two of its drivers won a case for being classed as ‘workers’ who deserved minimum wage and paid holiday.
Uber previously filed an appeal against the decision to disclose whether its VAT tax liabilities were assessed last month. The taxi company could be on the hook for £1.5billion in unpaid VAT
But because the threshold for VAT is only for individuals earning more than £85,000 a year, none of the drivers need to charge it.
HMRC claimed in court its dealings with Uber were commercially sensitive information which could undermine confidentiality, but this was dismissed by the court.
Ms Justice Lieven said she did not accept HMRC’s argument ‘that this approach would undermine taxpayer confidentiality because any third party could judicially review HMRC and then seek disclosure of the taxpayer’s affairs.
‘Plainly, if HMRC thought that a claim was being brought as a fishing expedition, or simply to obtain confidential information, then it could and doubtless would defend the claim on that basis without disclosing anything confidential.’
She added that even if the case was simply about weighing up Uber’s right to confidentiality, ‘I would find that the intrusion into Uber’s confidentiality (or article 8 rights) is actually rather slight.
HM Revenue and Customs previously claimed it had made no assessment, but declined to confirm whether this position had changed once the court case was launched
‘The only information which at this stage HMRC want to disclose is whether or not they have made a protective assessment.’
Despite Uber and HMRC’s attempts to withhold any potential information through the courts, company documents show the firm recognises the VAT issue could heavily impact the business.
Uber Technologies’ accounts in the US say: ‘Losing the (case in which drivers can be classified as workers) may lead the UK tax regulator to classify us as a transportation provider, requiring us to pay VAT on gross bookings both retroactively and prospectively.’
The most recent UK accounts filed with Companies House added: ‘The company is involved in a proceeding in the UK involving HMRC, the tax regulator in the UK, which is seeking to classify the company as a transportation provider.’
Separately, Uber is battling with the courts after Transport for London stripped it of its licence. The decision is under appeal.
A spokeswoman for Uber told MailOnline: ‘We can’t comment on any discussions with HMRC but we will always fulfil the tax obligations in any country in which we operate.’