Uber chased by HMRC for extra £386m VAT
HMRC is pursuing Uber for £386m extra in VAT, after paying £615m to resolve a tax dispute last year.
In its results statement yesterday, Uber said that “UK tax authorities had disputed the amount and manner in which we were applying VAT to our UK business,” since the restructuring of its business model last March.
The ride-hailing app has come under fire for the way in which it handles its tax affairs in recent years.
It had previously argued that its position as an agent rather than employer of its drivers meant that VAT charges should be applied to each individual driver’s revenue, which is likely to fall below the UK’s £85,000 VAT threshold.
However, a landmark High Court court ruling last year determined Uber’s drivers were employees, not self-employed contractors, resulting in the firm adding VAT from March 2022.
It handed £615m to HMRC in November following the changes, which it said would resolve outstanding claims.
However, it is now being chased by the taxman for an extra £386m, after HMRC disputed the way Uber had applied so-called ‘TOMS’ rules – a tax simplification measure for tour operators.
Uber’s application of TOMS had meant that it paid a 20 per cent VAT charge only on the profits of each of its rides, a set up which is disputed by HMRC and will ultimately be resolved in court.
An Uber spokesperson said “Uber is seeking clarity for the whole industry in order to protect drivers and passengers.”
A HMRC spokesperson said: “We have a strong track record on large business tax compliance and actively challenge them on tax due.
“Between 1 April 2017 and 31 March 2023, we secured more than £68 billion in additional revenues from large businesses. This is tax that would have been lost to the Exchequer without our proactive intervention.”
Yesterday, the ride hailing giant hit an operating profit for the first time in its history, on the back of soaring demand for its services.
Income from its operations hit $326m (£254.9m) in the quarter to July, swinging from a prior year loss of $713m (£557.5m). The New York-listed group also raised its forecast for the coming three months.