UK Taxi Operators Challenge Uber’s VAT Push in Supreme Court

Two British taxi companies, Delta Taxis from Liverpool and Veezu from Cardiff, have launched a crowdfunding campaign to support a legal battle against Uber over the application of VAT on private hire fares outside London. The outcome of this case, set for a Supreme Court hearing in July, could significantly impact private hire operators, drivers, and passengers across the UK.

Uber is seeking a ruling that would require all private hire operators to charge VAT on fares, arguing that this change would ensure consistency and create a level playing field across the industry. The minicab industry, however, has pushed back against the proposal, warning that it could increase fares by at least 20% and threaten the viability of smaller firms.

The legal dispute follows a 2021 ruling that forced Uber to apply VAT to its fares in London. Subsequently, Uber initiated legal action against Sefton Council in Merseyside, where Delta Taxis operates, over the contractual obligations of private hire firms. Traditionally, these companies classify drivers as self-employed contractors, a model that has exempted them from VAT liabilities.

Industry representatives argue that introducing VAT could disproportionately affect passengers who rely on private hire services for essential travel. According to data from Veezu, approximately 43% of minicab journeys are taken for work, education, or medical purposes rather than leisure. The increased cost of fares could particularly impact elderly individuals and those with limited mobility, especially in areas with inadequate public transport options.

The potential ramifications extend beyond passengers, with industry experts warning that thousands of small operators could be forced out of business. An estimated 25,000 self-employed drivers may lose their livelihoods if firms struggle to absorb the additional financial burden.

Paul McLaughlin of Delta Taxis emphasized the significance of the case:

"This court case could have massive repercussions for PHV firms like us using the traditional agency model, which has been part of British culture for generations. If Uber win, it will add at least 20% to the cost of a private hire taxi fare outside of London … The impact will be felt far and wide."

Nia Cooper, chief legal officer at Veezu, reinforced the importance of protecting the industry:

"This case is about protecting the future of the private hire industry and the millions of passengers who rely on it every day. The private hire industry is integral to the transport network in UK and provides essential journeys to passengers, particularly those that are vulnerable."

An Uber spokesperson defended the company’s position, stating:

"Uber believes that there should be consistency throughout the UK to ensure all operators are required to have the same model."

”This court case could have massive repercussions for PHV firms like us using the traditional agency model, which has been part of British culture for generations.”

The Supreme Court's decision is expected to have far-reaching consequences for private hire operators nationwide, potentially reshaping the landscape of the industry.