The judge’s ruling explicitly stated that the VAT consequences of changing the operating model were irrelevant to the case. This meant that the court’s decision did not hinge on potential changes to the VAT obligations of ride-sharing platforms.
This legal victory for Uber emphasized that the case was primarily concerned with whether Uber and others, are indeed private hire operators, not tax implications.
Our view is that only HMRC in an individual cases or national Government legislation can change the VAT environment, not regulators. So, for the time being carry on with your existing VAT model, (however we suggest that everyone have a well thought out and defendable VAT model, PH is still always under scrutiny.
I’m also not saying it will not be under further scrutiny in the future, but even after The Sefton case please do not rush to change anything. A tech companies ride hailing platform is not the traditional PH model. Let’s see what our government has in store for us first”.
As for the ruling, I feel that Private Hire Operators have always acknowledged at least a ‘duty of care’ of the passenger, so the move to principal isn’t such a big jump. However, it is an interesting use of the word ‘principal’ and could be conceived as an attempt to imply tax obligations. There were other words that could have been used such as “primary” or “main” to avoid the confusion, only time will tell.
Gary Jacobs
Eazitax
