Date of Judgment: 29 July 2025 Case: D.E.L.T.A. Merseyside Ltd and another v Uber Britannia Ltd
⚖️ Background
Uber Britannia Ltd (UBL) appealed to the UK Supreme Court seeking to enforce a uniform booking model for private hire vehicles (PHVs) outside London. UBL argued that under the Local Government (Miscellaneous Provisions) Act 1976, PHV operators must enter into a direct contract of hire with passengers upon accepting a booking—known as the “hire contract model.”
This model was adopted by Uber following a 2021 High Court ruling under the Private Hire Vehicles (London) Act 1998, which required London operators to contract directly with passengers.
⚖️ Supreme Court Ruling
The Supreme Court unanimously dismissed Uber’s appeal, affirming the Court of Appeal’s decision that:
- The 1976 Act does not mandate the hire contract model.
- Operators may continue using agency or intermediary models, where bookings are accepted without immediate contractual liability.
- Section 56(1) of the Act deems the operator liable only if a hire contract is made, but does not require one to be made upon booking.
Key Legal Findings
- The Act regulates PHV services through a licensing regime, not by prescribing contractual structures.
- The term “operate” is narrowly defined as making provision for the invitation or acceptance of bookings, not necessarily entering into hire contracts.
- The deeming provision in Section 56(1) ensures operator liability after a hire contract is formed, regardless of the booking model used.
️ Implications
- PHV operators outside London can legally continue using flexible booking models.
- The ruling preserves commercial diversity in the private hire sector.
- It clarifies that public safety and accountability are achieved through licensing—not mandatory contractual obligations.
VAT Consequences of the Supreme Court Judgment
Uber Britannia Ltd (UBL) sought a declaration that all PHV operators outside London must contract directly with passengers — a model that would classify them as principals for VAT purposes. This would mean:
- Operators would be liable for 20% VAT on the full fare, not just their commission or booking fee.
- It would align VAT treatment outside London with the stricter rules already applied within London.
⚖️ Supreme Court Decision
The Court rejected Uber’s appeal, confirming:
- The Local Government (Miscellaneous Provisions) Act 1976 does not require operators to act as principals.
- Operators may continue using agency models, where the driver contracts directly with the passenger.
- Section 56(1) is a deeming provision, not a mandate — it ensures liability only if a hire contract is formed, regardless of the business model.
VAT Implications
- No automatic VAT liability for PHV operators outside London.
- Operators like D.E.L.T.A. and Veezu can continue charging VAT only on their booking fees, not the full fare.
- The ruling prevents a nationwide VAT expansion, which could have added £1 billion annually to passenger costs.
- HMRC’s current VAT enforcement remains limited to London, where operators must act as principals.
Example Comparison
| Operator Type | VAT Liability on Fare | Business Model | Region |
|---|---|---|---|
| Uber (London) | Yes – 20% on full fare | Principal | London |
| D.E.L.T.A. Merseyside | No – VAT on booking fee only | Agent/Intermediary | Outside London |
Source Supreme Court
Uber’s VAT case hits the brakes at Supreme Court
- Supreme Court Ruling: The Supreme Court dismissed Uber’s appeal to have rival private hire vehicle (PHV) operators outside London treated as principals for VAT purposes, maintaining that Uber’s model does not necessitate a uniform approach across different operators.
- Business Models Examined: The court noted that various business models exist within the PHV sector, and the Local Government (Miscellaneous Provisions) Act 1976 does not require all operators to act as principals, thus allowing for flexibility in how bookings are handled.
- Judgment Summary: The Supreme Court clarified that the 1976 Act does not impose a singular business model for PHV operations, and that accepting a booking does not inherently mean the operator must be the principal, thereby upholding the validity of alternative operational models.
Source Accountingweb
