Taxi operators competing with Uber will not be required to pay a 20% VAT on earnings outside London after the UK’s highest court ruled that private-hire firms do not establish a direct contract with passengers.
The case originated from a 2021 supreme court decision classifying Uber drivers as workers, affecting Uber’s tax liabilities. Uber later sought a legal clarification that private-hire operators formed contracts with passengers, which the London high court affirmed in 2023.
This initial ruling would have imposed a 20% VAT on operators, but it was overturned last July after Delta Taxis and Veezu contested the decision. Uber then escalated the matter to the supreme court, which rejected its argument unanimously on Tuesday.
In another legal matter, Bolt, an Estonian ride-hailing and delivery service, recently prevailed against an HMRC appeal concerning its VAT obligations. The tax authority had argued for a 20% VAT on the full fare, but a court ruled that Bolt is only liable for VAT on its portion of earnings. HMRC has been permitted to challenge this decision in a higher court.
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