Uber is embroiled in a significant tax dispute with HM Revenue & Customs (HMRC) over nearly £1 billion in VAT payments.
- Since March 2022, Uber has been liable for 20% VAT on its fares and delivery sales, resulting in a £951 million charge by HMRC.
- Uber argues that VAT should apply only to its profits, not total revenues, and is appealing the assessments.
- The Supreme Court’s 2021 ruling reclassifying Uber drivers as ‘workers’ triggered historic and future VAT liabilities for the company.
- Current consultations by the Treasury on VAT rules for private-hire vehicles could influence the outcome of this dispute.
Since March 2022, Uber has been mandated to pay 20% VAT on its fares and delivery sales, leading to a total charge of £951 million by HMRC. Uber contends that this VAT should apply solely to its profits rather than overall revenues.
In its recent accounts filed at Companies House, Uber disclosed it had paid £631 million in VAT to HMRC in 2023, categorising this as a recoverable debt. Additionally, the company paid £150 million in January and received an additional bill of £170 million recently.
In its UK annual report, Uber stated, “The payments do not represent our acceptance of the assessments. We believe that we will be successful in our appeal, upon which the full amount of our payments will be returned to us with interest.”
Historically, Uber did not levy VAT on customers, arguing it merely acted as an intermediary between customers and VAT-exempt drivers unless the latter earned over £85,000 annually. This stance changed following the Supreme Court’s 2021 ruling that classified Uber drivers as ‘workers’, prompting a £615 million settlement with HMRC over historical unpaid VAT and acceptance of future VAT liabilities.
Uber asserts that the 20% VAT should be applied to its profit on sales, invoking the Tour Operators’ Margin Scheme (TOMS). A tax tribunal’s recent support for rival Bolt’s eligibility for TOMS has bolstered Uber’s position. However, HMRC is appealing this ruling and the Treasury is consulting on potential changes to VAT rules for private-hire vehicles.
Uber’s UK accounts reveal a profit of £29 million on revenues of £5.3 billion last year, with a corporation tax payment of £4.5 million. The company’s revenues increased by 56%, partly attributed to a business restructuring in 2022.
The resolution of Uber’s VAT dispute with HMRC will be pivotal for the company’s financial strategy moving forward.
