Uber: The Never-Ending Story….
Uber versus TFL versus UTAG versus ADCU with Free Now watching on….
You have probably heard by now that something was going on at The Royal Courts of Justice (Admin division). Essentially, there has been a judgement on a judgement.
As I look on as a (slightly) interested bystander: here’s what I see. It’s either an epoch-making event that will change everything, or the end of tax, or the end of the tech apps or … (insert emotive phrase here). In truth, most pundits are still undecided.
Here’s what the reality is.
The press releases tell us that its about the role of London private hire vehicle (PHV) operators and the contracts that they enter into with passengers:
“….in order to operate lawfully under the Private Hire Vehicles (London) Act 1998 a licensed operator who accepts a booking from a passenger is required to enter as principal into a contractual obligation with the passenger to provide the journey which is the subject of the booking.”
The unions claimed a victory for worker status saying that the ruling gave clarity in determining that private hire drivers were workers. However, worker status has, to date, not been implemented to any great extent anywhere. In some cases, operators have adopted a ‘Self Employed Plus’ style. This is a halfway house, but as I write this there is no compulsion in law to give drivers worker status automatically. This doesn’t mean to say this won’t happen in the future.
The case is really testing whether Ubers operations were compatible with operating laws in London. The ruling basically says that it was unlawful for an operator to act as an ‘agent’ between a driver and a passenger.
This means that Uber and other ride-hailing companies, not individual drivers, will enter into contracts directly with passengers and will be held liable for anything that goes wrong with the service.
This has caused an uproar because to many private hire operators (many of whom consider themselves as agents for tax purposes) a company that was VAT registered, would in effect have to add VAT to the fare. Hence 20% more cost to the travelling public and no direct benefit to operators or drivers.
However, as with the original Supreme Court ruling (which did not actually create any laws), I don’t necessarily see how Uber or any other ride hailing app such as Bolt (who are not VAT payers in the UK) are actually going to be affected in the short term.
Lots of ‘experts, are saying that Ubers VAT bill will create major losses, but no one has said how HMRC can force any global operator to pay VAT. At the moment it’s all just words.
In many ways the reason for The ADCU to get involved is to force the definition to be confirmed to uphold their original judgement, I doubt that Mr Farrer, however clever he is, is expected to change the nature of tech tax in the UK.
When reading the press on this judgement, there is an awful lot of use of the word should, would, and maybe. The agent model is widespread, Transport for London remained neutral during the legalities.
The judges concluded that:
“To operate lawfully, an operator must undertake a contractual obligation to passengers”
The question is: what are TFL going to do about implementing this decision? They have already commented on the need for operators to comply with the High Court judgment. TFL say that operators should be “considering whether any changes to their way of working are required”. Unfortunately, this is without actually laying out a model that operators must adhere to.
So, what are we doing at the moment? We are considering our positions, although no one has actually outlined what our positions are from a regulatory standpoint. TFL is considering the written terms of those applying for or renewing a licence and looking at operators’ terms during the period of the licence. So even though the press says ‘panic’, It’s all still speculation at the moment.
In conclusion, much of the presumed outcome of this decision was not necessarily why the parties went to judgement and there will be a lot more head scratching before anyone can give clear and precise advice. Watch this space.
Gary
Gary Jacobs is the MD of Eazitax.
