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UK ride-sharing may face VAT liability for platforms

Uber ruling in High Court may influence HMRC review if VAT should be charged by private hire companies, including ride-hailing services for the first time

The UK High Court yesterday has upheld an earlier Supreme Court employment law ruling that Uber and similar private taxi firms operating in London should consider their drivers as workers and not contractors. This suggests the taxi firm has a contract with the passenger when it accepts the booking.  This means the driver is effectively working for the ride sharing platform and the legal obligations for the ride rest with the platform.

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HMRC reviewing ride-sharing VAT liabilities

Since Uber is VAT registered, this could require a 20% additional tax levy. Currently, it is the taxi driver who is generally below the UK VAT registration threshold of £85,000.  HMRC is currently revieing the VAT obligations on ride-hailing, and this ruling will have a heavy influence. In the past, rider sharing platforms have claimed they are mere agents in the transaction, and not the VAT principal – responsible for charging VAT.

EU considering gig and sharing economy platform VAT

The European Union is also reviewing this issue as part of its VAT in the Digital Age program. This includes a subsection on VAT on platform economy. This may also opt to make the platforms in the gig and sharing economies the deemed supplier, and therefore liable for the VAT.

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