THE TAX AFFAIRS of mini-cab providers Uber have been called into question by Public Accounts Committee chairwoman Margaret Hodge.
In a letter to London mayor Boris Johnson, Hodge raised concerns about the company’s tax structure and called on the mayor to ensure that Transport for London (TfL), which regulates the taxi industry, “does not inadvertently allow tax avoidance in London”.
Uber’s tax structure requires customers to use its app operated by a Dutch entity, in turn seeing it pay Dutch corporation tax instead of the UK levy, Hodge alleged.
She also claimed TfL has failed to apply its regulations to Uber by not demanding it has a London-licensed base, which would oblige the company to pay UK corporation tax.
“Surely TfL has a duty to enforce legislation that will ensure a fair and level playing field for all taxi and private hire operators?” she asked.
“London taxi and private hire drivers are used to competition… However, it has been put to me that new entrants to the market, such as Uber, are competing unfairly by allegedly failing to comply with many of the regulations laid down by tax law,” Hodge wrote.
TfL has approved Uber to operate because it says the smartphones its drivers use are not attached to the vehicles and, as such, are not meters. It has, however, referred the issue to the High Court to give a final ruling on whether Uber violates the 1998 law governing taxis.
The dispute over whether the model constitutes a meter has led to protests in London, Paris, Madrid and Berlin.
Over the course of the dispute between drivers of black cabs and those using apps including Uber’s, the Licensed Private Hire Car Association has maintained that channelling passengers’ payments through Uber BV – a Netherlands-based entity – was a breach of regulations, although it has admitted the British company that dispatches the cars, Uber London, is licensed.
A spokeswoman for Uber said: “Uber complies with all applicable tax laws, and pays taxes in all jurisdictions, such as corporate income tax, payroll tax, sales and use tax, and VAT. [A recent report from the Law Commission provides a number of recommendations for reform of the law in this area that may be debated by parliament at some future point in time.] Uber London Limited is a licensed PHV operator and recently passed with flying colours the largest inspection of records ever conducted by TfL. Passenger health and safety is paramount to Uber.”
Colin imagines how Apple's logo might change in the wake of the EC's ruling over its Irish tax arrangements
A ruling from the European Commission could force Apple to pay billions of euros in back taxes over the company’s tax arrangements with the Irish government
Freelancers and micro-businesses still need more information about the government’s plans to make tax digital
New dividend tax is an attack on small business owners and is acting against the best interests of the UK economy, warns Top 50 accountants, Bishop Fleming