Yahoo Finance Uber faces £1bn VAT showdown with HMRC
Uber is locked in a battle with the taxman over nearly £1bn in VAT payments, which the ride-hailing app is seeking to recover through the courts.
Since March 2022, HMRC has charged Uber £951m, requiring the company to pay 20 per cent VAT on its fares and delivery sales. But Uber argues that VAT should only apply to its profit, not its revenue.
Recent filings with Companies House reveal that the American firm has listed £631m in VAT paid to HMRC in 2023 as a debt it expects to reclaim. The company also paid £150m in January and received an additional bill of £170m.
“The payments do not represent our acceptance of the assessments,” Uber said in its accounts. “We believe that we will be successful in our appeal, upon which the full amount of our payments will be returned to us with interest.”
It had previously argued that its position as an agent rather than employer of its drivers meant that VAT charges should be applied to each individual driver’s revenue, which is likely to fall below the UK’s £85,000 VAT threshold.
But this changed after a 2021 Supreme Court ruling classified its drivers as “workers,” not self-employed contractors, leading to a £615m VAT settlement with HMRC and future VAT liabilities.
HMRC maintains that 20 per cent VAT should apply to full fares, but Uber argues it should only apply to profits under the Tour Operators’ Margin Scheme (TOMS) – a tax simplification measure for tour operators. HMRC is appealing a recent ruling in favour of Uber’s rival Bolt, which supported TOMS eligibility.
In the UK last year, Uber booked a turnover of £5.3bn and revenue of £3.4m. The company’s UK holding entity posted pre-tax profits of £32m, up from £5m the previous year.
Despite achieving its first full-year profit in February, Uber swung to a net loss of $654m (£524m) in the first quarter of this year, which it described as an “inflection point” after years of losses.
City A.M. has approached HMRC for comment.