Obtain free HM Income & Customs updates
We’ll ship you a myFT Day by day Digest e-mail rounding up the newest HM Income & Customs information each morning.
The UK tax authority is pursuing Uber, the ride-hailing app, in a widening dispute over VAT.
The corporate stated that HM Income & Customs had “disputed the quantity and method” it had utilized VAT to its UK mobility enterprise.
Consequently, the tax authority assessed that the corporate owed a further £386mn ($491mn) in taxes, Uber stated in its half-year outcomes revealed on Tuesday.
Uber plans to enchantment in opposition to the choice on the UK tax tribunal.
Nonetheless, final month it paid the £386mn to HMRC, which will probably be refunded ought to it win its enchantment.
The event comes after Uber agreed a settlement with HMRC final yr that noticed it pay £615mn to the tax workplace after it misplaced a case on the UK Supreme Courtroom in 2021 over the VAT therapy of its drivers.
Uber had argued that it was exempt from VAT as a result of its drivers have been self-employed contractors. Nonetheless, the Supreme Courtroom dominated that its drivers needs to be thought-about employees.
The newest tax dispute centres round modifications that the San Francisco-based firm has made to its enterprise mannequin since March 2022 following the Supreme Courtroom ruling.
HMRC has challenged Uber’s use of guidelines designed to simplify VAT for tour operators, referred to as the Tour Operators Margin Scheme. These guidelines are additionally utilized by minicabs and different ride-hailing apps.
Uber is arguing that every one private-hire operators within the UK are eligible to pay VAT on the revenue margin of a visit fairly than its full price, as HMRC contends, in accordance with individuals conversant in the scenario.
Uber stated: “Pressing readability is required for the entire trade in an effort to defend drivers and passengers.”
HMRC stated: “We have a robust report on giant enterprise tax compliance and actively problem them on tax due.”
Dan Neidle, former head of tax at regulation agency Clifford Likelihood and founding father of think-tank Tax Coverage Associates, stated it was “laborious to say” which occasion would finally win the dispute.
He added that the dispute may take a decade to resolve, with appeals and counter appeals possible.
No date for a courtroom listening to has been introduced.
Final week Uber gained a case on the UK excessive courtroom over how VAT is utilized by non-public cab operators and taxi-hailing corporations within the UK exterior London.
The case had been delivered to degree the taking part in area with rivals following Uber’s Supreme Courtroom loss in 2021.