As Uber fights to retain its London operators license, the company faces questions over its tax structure where its alleged this multi billion dollar company, actually pays less tax than four licensed cabbies... it also pays no VAT on fares. Concerns have been raised with the London transport regulator (TfLTPH) by TfL board member, Mr Liebreich.
According to an email sent to TfL board members and officials in August, Michael Liebreich said the question of tax was, “Relevant to Uber’s relicensing” and asked how Uber does not pay VAT “in the UK on services it provides in the UK”.
Uber, book all of its UK rides through a Dutch subsidiary... which incidentally is against TfL regulation. This factor allows it to avoid paying the 20 per cent value added tax charged on goods and services in the UK.
Mr Liebreich’s email went on to say:
“I know tax is a question for HMRC, but I have never understood how Uber’s services can be London-based for the purposes of the Taxi and Private Hire Act 1998, but non-UK based for the purposes of taxation, in particular VAT”. The email also raised concerns about safety and Uber’s use of “Greyball” software that blocks regulators from seeing the app in the city.
Mr Liebreich’s email was sent to almost 50 TfL board members, officials and assistants, including Helen Chapman, head of the taxi and private hire division, and Val Shawcross, deputy mayor for transport. Uber have declined to comment on the email.
TfL did not cite tax in its decision to revoke Uber’s license, instead pointing to its concerns in areas such as reporting criminal offences and obtaining fake medical certificates and fake background checks for drivers, as grounds for the denial.
Unusually, Uber will be allowed to continue to operate while it appeals against the decision, a process that could take months. The fact that from this Saturday (30th September) Uber will be operating without a licence, seems to be of no consequence to TfL....and yet, London Cabby Sean Stocking, who's licence also was revoked by Peter Blake of TfL, has been thrown out of work, causing great hardship on his family, while waiting for his appeal to be heard....again one rule for Uber, and another rule for a Taxi drivers.
Uber’s strategy to avoid the UK’s 20 per cent VAT is not unique, but is the subject of a court case this year where the plaintiff sued Uber to demand a VAT receipt for an Uber trip. That case, which is still ongoing, could push Uber to collect VAT if the plaintiff wins.
Uber argued in that case that it is only an agent acting on behalf of the drivers who are self-employed, and is not itself a service provider, and thus not responsible for collecting VAT.
Separately, the company’s lawyers will begin an appeal on Wednesday this week, against an employment tribunal ruling last year that found its drivers were “workers” owed the minimum wage and holiday pay.
The questions raised by Mr Liebreich’s email is serious, and it's worrying that only he has bought this up.
Why is Uber's operation only now being investigated? How/why have they been allowed to circumvent the regulation which state all bookings must be received by an operator in the area they are licensed?
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