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Cabbies in fight against Uber tax loophole

TAXI drivers have called on the government to address “unfair” tax practices used by mini-cab provider Uber, and threatened to put in place similar arrangements unless action is taken.

Uber has already attracted controversy, with traditional taxi providers suggesting the app with which customers hail their drivers acts, in effect, as a meter. Its tax arrangements have also drawn ire as its structure requires customers to use its app operated by a Dutch entity, in turn seeing it pay Dutch rates instead of the UK’s.

In a letter sent to HM Revenue & Customs, chairman of the Licensed Private Hire Car Association Steve Wright said Uber gained an “unfair competitive advantage” by diverting payments through the Dutch subsidiary.

Wright claimed Uber “appears to have structured its [London] operation with the sole purpose of avoiding the application of VAT in the UK at the prevailing rate.

“This is despite being a UK-registered company and a Licensed London Private Hire Operator, promoting its services in the UK and carrying out journeys in the UK for UK credit and debit cardholders.”

He called on HMRC to investigate the structure, particularly given changes to VAT legislation that see charges on digital services within the EU are levied based on the customer’s location.

Wright added that should Uber’s arrangement be found to be legitimate, the LPHCA would “reluctantly recommend to our members that they adopt the same VAT treatment as Uber London Ltd”.

“This will of course represent a further significant loss to HM Treasury but we cannot continue to stand by and watch our members being disadvantaged by unfair competition,” he said.

The LPHCA represents more than 200 firms who work with 20,000 licensed drivers across the country. Its challenge allies it with London’s black cab drivers, who have protested against the decision by Transport for London to allow the San Francisco-based start-up to operate in the capital, a ruling which has been referred to the High Court.

Uber said in a statement:”Uber complies with all applicable tax laws … As such we are fully compliant with the tax laws of the United Kingdom and the European Union.”

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