[Jack Malarkey]

Here in Australia, a Federal Court justice has confirmed that Uber drivers need to pay goods and services tax (GST) (the equivalent of value added tax (VAT)) irrespective of turnover.

Here's a link to the decision for those interested: http://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2017/2017fca0110.

The usual position in Australia is that you need to register for GST only if your annual turnover is at least AUD$75,000 (about £46,500). A special rule, however, applies if you supply 'taxi travel'. In that case, you need to register for GST irrespective of turnover.

The GST legislation defines 'taxi travel' as 'travel that involves transporting passengers, by taxi or limousine, for fares'.

The court has held that Uber drivers fall within this definition on the basis that they transport passengers by taxi (in the ordinary meaning of the word) for fares.

The GST rate in Australia is a single rate of 10%. This is applied to the gross fares (ie, before reduction by Uber's commission).

The case may go on appeal.

What is the position in the United Kingdom? Do Uber and taxi drivers pay VAT? Do they have access to the general turnover threshold for VAT or do they pay VAT from the first pound? What is the applicable rate?

 

[Fostel]

General rate of VAT (value added tax) in the UK is 20%
Threshold for VAT >£83,000 (You must register for VAT with HM Revenue and Customs (HMRC) if your business' VAT taxable turnover is more than £83,000.)

The provision of transport in taxis and hire cars is standard-rated unless the number of seats is of not less than 10. The number of people a limousine is licensed to carry does not determine the liability, the physical capacity of the vehicle does. We can find further information in Notice 700/25 Taxis and hire-cars.

https://www.gov.uk/government/publi.../vat-notice-70025-taxis-and-private-hire-cars

Drivers of taxis and private hire cars
2.1What supplies I make as an independent self-employed driver
If you have purchased or rent your own vehicle and operate it on a self-employed basis, you'll normally be in business on your own account. This means that you'll be making taxable supplies in the form of:

• transport supplied direct to your own passengers
• your services to another taxi business where you supply them under a contract for services

Where you supply transport to your own passengers you may use the agency services of a taxi business (see section 3) or a taxi association (see section 4) to obtain customers for you. But if you drive for a taxi or private hire business as its employee, you aren't considered to be in business for VAT purposes.

2.2When you need to register for VAT
If you're making taxable supplies (see paragraph 2.1) you must register for VAT if the full amount you're paid for those supplies exceeds the VAT registration threshold. To calculate this you must add back any amounts, such as vehicle and radio rentals or agency charges, deducted by a taxi firm before they pay you. You can find out more about registering for VAT in Notice 700/1 Should I be registered for VAT? If you're an owner driver registered for VAT, you must remember to issue a VAT invoice to any of your VAT registered customers who asks for one.


I wouldn't be surprised though if they will tax drivers extra as I can't see uber paying any taxes. Someone has to.

 

[Jack Malarkey]

General rate of VAT (value added tax) in the UK is 20%
Threshold for VAT >£83,000 (You must register for VAT with HM Revenue and Customs (HMRC) if your business' VAT taxable turnover is more than £83,000.)

The provision of transport in taxis and hire cars is standard-rated unless the number of seats is of not less than 10. The number of people a limousine is licensed to carry does not determine the liability, the physical capacity of the vehicle does. We can find further information in Notice 700/25 Taxis and hire-cars.

https://www.gov.uk/government/publi.../vat-notice-70025-taxis-and-private-hire-cars

Drivers of taxis and private hire cars
2.1What supplies I make as an independent self-employed driver
If you have purchased or rent your own vehicle and operate it on a self-employed basis, you'll normally be in business on your own account. This means that you'll be making taxable supplies in the form of:

• transport supplied direct to your own passengers
• your services to another taxi business where you supply them under a contract for services

Where you supply transport to your own passengers you may use the agency services of a taxi business (see section 3) or a taxi association (see section 4) to obtain customers for you. But if you drive for a taxi or private hire business as its employee, you aren't considered to be in business for VAT purposes.

2.2When you need to register for VAT
If you're making taxable supplies (see paragraph 2.1) you must register for VAT if the full amount you're paid for those supplies exceeds the VAT registration threshold. To calculate this you must add back any amounts, such as vehicle and radio rentals or agency charges, deducted by a taxi firm before they pay you. You can find out more about registering for VAT in Notice 700/1 Should I be registered for VAT? If you're an owner driver registered for VAT, you must remember to issue a VAT invoice to any of your VAT registered customers who asks for one.


I wouldn't be surprised though if they will tax drivers extra as I can't see uber paying any taxes. Someone has to.

Many thanks, Fostel, for this comprehensive, clear and helpful response.

 

[Cabbie2B]

Here in Australia, a Federal Court justice has confirmed that Uber drivers need to pay goods and services tax (GST) (the equivalent of value added tax (VAT)) irrespective of turnover.

Here's a link to the decision for those interested: http://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2017/2017fca0110.

The usual position in Australia is that you need to register for GST only if your annual turnover is at least AUD$75,000 (about £46,500). A special rule, however, applies if you supply 'taxi travel'. In that case, you need to register for GST irrespective of turnover.

The GST legislation defines 'taxi travel' as 'travel that involves transporting passengers, by taxi or limousine, for fares'.

The court has held that Uber drivers fall within this definition on the basis that they transport passengers by taxi (in the ordinary meaning of the word) for fares.

The GST rate in Australia is a single rate of 10%. This is applied to the gross fares (ie, before reduction by Uber's commission).

The case may go on appeal.

What is the position in the United Kingdom? Do Uber and taxi drivers pay VAT? Do they have access to the general turnover threshold for VAT or do they pay VAT from the first pound? What is the applicable rate?

More in detail:

https://www.gov.uk/government/publi.../vat-notice-70025-taxis-and-private-hire-cars

 

[Jack Malarkey]

More in detail:

https://www.gov.uk/government/publi.../vat-notice-70025-taxis-and-private-hire-cars

Many thanks, Cabbie2B. That's very helpful.

 

[UberDriverAU]

How likely is it that a driver in the UK would exceed the VAT threshold if their sole source of income was taxi or Uber driving? The threshold in Australia seems to be substantially lower, so it'd be a lot easier to exceed the threshold. The GST threshold hasn't changed since the year 2000, when we introduced the GST. If the threshold was adjusted for inflation here in Australia, the threshold would currently be ~$114K.

 

[Fostel]

How likely is it that a driver in the UK would exceed the VAT threshold if their sole source of income was taxi or Uber driving? The threshold in Australia seems to be substantially lower, so it'd be a lot easier to exceed the threshold. The GST threshold hasn't changed since the year 2000, when we introduced the GST. If the threshold was adjusted for inflation here in Australia, the threshold would currently be ~$114K.

No chance to touch the threshold.

 

[UberDriverAU]

No chance to touch the threshold.

Cheers.

Perhaps Uber is barking up the wrong tree and should be arguing for an increase in the threshold, adjusted each year for inflation, Jack Malarkey.

 

[Jack Malarkey]

Cheers.

Perhaps Uber is barking up the wrong tree and should be arguing for an increase in the threshold, adjusted each year for inflation, Jack Malarkey.

I think that's an important part of it, UberDriverAU. The initial adjustment would need to based on at least inflation since 2000 (or something similar to the United Kingdom VAT threshold) and then incorporate annual adustments (as happens, for example, with the car depreciation limit).

I think they would also need to press for removal of the provision in Australia that treats the providers of 'taxi travel' differently from other enterprises such that they need to register for GST regardless of turnover.

Even if Uber does successfully appeal against the current single-justice decision of the Federal Court, I doubt that an approach that treats Uber drivers for GST purposes differently from taxi drivers is sustainable.

I suspect that the Australian Government would move quickly to have Parliament amend the law to ensure equal treatment. The apllication date (prospective or retrospective) of such amendments wound be of interest. Of course, such an amendment might not be passed by the Senate.

I'll continue to follow the issue closely as no doubt will you.