The Supreme Court has concluded that taxi drivers, whose work is arranged through Uber’s smartphone app, are Uber’s employees, rather than contractors performing services independently under contracts made with passengers, using Uber as their booking agent.
While the immediate reaction has focused on Uber drivers’ entitlement to employment rights, such as minimum wage and holiday pay, further litigation on the VAT position of Uber’s business model may be waiting in the wings. Full details have yet to emerge, but it is understood that Uber also treats itself as an agent for VAT purposes, so accounts for VAT on the 20 per cent commission it charges to drivers who find work through its app. On this basis, it would be the driver who is responsible for any VAT on the private hire service he or she provides to the customer and, as most drivers’ individual turnover will not exceed the VAT registration threshold of £85,000 per year, in practice no VAT is due on the driver’s share of the fare.
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