- A respected UK lawyer is suing Uber for alleged unpaid VAT.
- Jolyon Maugham thinks Uber owes around £20 million in VAT from 2015 alone.
- Uber lost a similar case in Australia which found drivers needed to pay an equivalent tax.
Uber’s having a rough week.
The company is facing yet another legal challenge, this time in the UK, from a respected barrister who claimed Uber owes the country at least £20 million in VAT.
Jolyon Maugham QC has said he’s suing Uber to see whether the UK’s tax authorities give big US companies special licence when it comes to tax.
“I’m suing Uber to understand whether HMRC treats these big US multinationals, including Uber, with kid gloves,” he told ITV News. “Uber has undoubtedly arranged its business model to minimise its tax liability — dodge taxes, if you like — and to minimise the workers’ rights that it has to offer.”
When Business Insider asked for clarification, Maugham pointed to a post he wrote last year, exploring Uber’s liability for VAT, the UK’s goods and services tax.
That liability was compounded, he said, by last year’s ruling that Uber drivers ought to be classified as workers.
Here’s an excerpt:
“It seems as though Uber racked up about £115m in fares last calendar year . This would mean it had a VAT liability of just under £20m for London for that year. But HMRC can go back four years or, sometimes, more. There is no suggestion in the accounts of the relevant Uber entity — Uber London Limited — that it was aware it had this risk.”
While Uber drivers must pay VAT in the UK, Maugham said most don’t. “Indeed, they are incentivised to earn less than the VAT registration threshold.”
According to his back-of-the-envelope calculations, Uber owes HMRC 16.67% VAT on all its fares. And because VAT operates the same way across the EU, any liabilities that apply in the UK also apply in Europe — meaning a big tax bill for Uber.
Here’s what Maugham said:
“Going forward, absent material change in its operating model, Uber’s revenues in the UK net of VAT will fall by 16.67%. And by equivalent percentages across the rest of the United Kingdom and EU.”
Maugham added that Uber could restructure to avoid these problems.
An Uber spokesman said: “Drivers who use the Uber app are subject to the same VAT laws as any other transportation provider in the UK.”
Uber lost a related case in Australia, where a court found drivers must pay GST, the country’s equivalent of VAT, regardless of their earnings.