It’s that time of reflection again, although as always when we come to this point, most drivers and operators are too busy to worry about anything until things calm down in January.
So, let’s just muse upon our trade, its recent past and future and the rather strange place we are in. No pandemic talks anymore; the big issues are driver shortages and pending legislation. However, welcome to my version of the year. (Not all views expressed are mine by the way, just a reflection of the how the trade heard it).
Uber loses
In January Uber had yet another Court date. The App Drivers Union finally got a win for a group of ‘workers. The ruling made it even clearer that (in the eyes of the press) private hire drivers are workers. Gary (that’s me) disagreed because the appeal was at the supreme court, but the ruling was at tribunal meaning….
Despite the win, ‘worker status’ has not been implemented to any great extent anywhere. In some cases, operators have adopted a ‘Self Employed Plus’ style. This is a compromise, but the court judgment doesn’t specifically outline the way that operators need to act to honour their driver’s status. (This doesn’t mean to say it won’t happen in the future).
The case was really testing whether Uber’s operations were compatible with London’s regulations, leading to the now infamous Uber v TFL v ADCU and the recognition of passengers as principal. This led to THE big VAT debate….
Uber agrees to pay £615m to settle outstanding VAT claims
Later, in the year (November), Uber appeared once again in the headlines. They had agreed to pay HMRC £615m to settle outstanding VAT claims. In reality, the sum was much lower than the £1.5bn the taxman had reportedly raised in VAT assessments.
Having previously claimed that it should only pay VAT on the commission it receives from the driver. The tech company had seen its perception of itself turned upside down. We then continue with the VAT on fares arguments which go a little like this:
The word principal means principal for tax, so therefor if the Uber judgement with Transport for London also means that, then if Uber wins against another authority (Sefton) it goes countrywide. That case bleeds into 2023, so watch this space.
HMRC launches Conditionality tax checks
From April 2022 in England, taxi and private-hire drivers had to undertake tax checks to renew their licenses. If drivers aren’t registered for tax, they can’t get licensed.
We (Eazitax) of course launched a big campaign, empowering operators to educate and drivers to address this issue and continue earning a living. (C’mon I’m allowed one plug, please, we did it all for free)…
Where did the tax checks lead…
4000 drivers get an unwelcome letter from HMRC
From February and for months afterwards…, 4000 taxi and private-hire drivers that use platform apps got a letter asking for full disclosure on earnings. HMRC were urging drivers to make a ‘voluntary disclosure,’ the wording implying that HMRC know that they have undeclared their income. This one is set to run and run, but we have it under control
The government gives new guidance on employment status
The government presented new guidance to help individuals and businesses understand what employment rights they are entitled to. HOWEVER, to summarise, after four years of detailed discussions, the government has decided not to clearly legislate on this topic. Instead, they gave guidance, equating to ‘a suggestion to courts, not a direction to courts.’ This left advisors like me in the same position we were in before the guidance, making educated guesswork in a maze of legislation.
SO, what’s happening in 2023?
Is Making Tax Digital on the horizon?
Last week the treasury announced another delay to rolling out MTD, pushing the mandatory scheme for self-employed individuals back to April 2026.
The Tax Checks
Coming to Northern Ireland and Scotland in 2023. Read more here.
Private-Hire Fares Rising?
If the government takes too much of an interest, the Sefton Council case could move in that direction. This could mean fares rising by a fifth across the UK.
Its still unclear where the trade is on VAT on fares:
- Govt won’t comment properly yet.
- We have some early adopters of this (non-existent) VAT regime.
- HMRC taking it on a ‘case by case’ basis
The one thing that is obvious is that that company, based in Silicon Valley, is now seeking to force their competition in UK to adopt this regime. We will see.
FINALLY, if you haven’t already done it’ do your tax return for Jan 31st deadline. You know it makes sense.
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This article was originally written for Professional Driver Magazine.
