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Good Law Project Forces HMRC to Collect £1.5bn in VAT from Uber

26 points by davidgerard 6y ago

benjaminjosephw 6y ago
Wow, well done! Great to hear there are good folk out there fighting for the integrity of our public institutions. Everyone should have to play by the rules and keeping the state accountable to that end is an important task. This is really encouraging to see!
londons_explore 6y ago
Summary of the issue... VAT is kinda a sales tax in Europe. It means sellers must charge 20% on top of any sale, and give it to the government. Very small companies are exempt. Uber was arguing that they were just a platform like EBay, and that every individual driver was a small enough business that they didn't have to pay the tax. Uber paid the tax, but only on Ubers fee, not the total journey amount. This ruling is the government deciding that the tax was due on the entire journey.
- srtjstjsj 6y ago
  Isn't VAT supposed to be a Value Added Tax? Shouldn't the driver's expenses be deducted? Is personal labor service really subject to VAT? That's horrifically regressive, crippling the lowest paid laborers with VAT on top of income tax, instead of taxing the profit captured by the enterprise.
  - MHard 6y ago
    It depends. I, as a freelancer, am required to ask for a VAT tax but my clients can balance out the VAT tax for the services they buy from me with the VAT they ask from their clients. Personal labour in the sense of employment is exempt from VAT tax if the person is employed but then other forms of taxes, like the income tax apply. The amount of tax as well as the form in which they are collected vary from country to country. My personal opinion is that the tax system is actually quite clear and progressive, at least for me as a freelancer. I can file my taxes online without any hitches and the amount to pay and deductibles are easy to get (at least in Germany and Spain). Then again this whole thing varies from country to country and Spain requires you to give quarterly justifications on the VAT tax you owe which amounts to a lot of paperwork but not too much in my mind.
londons_explore 6y ago
While I don't object to the outcome here, the process to collect this VAT in my opinion was wrong. It looks like Uber decided they'd found a loophole in the VAT law. The government reviewed it and agreed. A random third party (the goodlaw project) forced the government to reconsider and collect the tax retrospectively. I don't want to live in a world where a random third party can 'telltale' on me to the government after I've already been given the go-ahead. In my mind, the correct route for this should be that the third party asks the government to clarify the law, and then Uber is forced to pay VAT from that point forward.
- user5994461 6y ago
  The process is wrong in that HRMC should be doing its job without having people pushing it to. I however refuse to give credit to Uber for finding loopholes and trying to get some pseudo approval to use them. They know very well that they operating on the edge on the law and it might come back to bite them.
  - londons_explore 6y ago
    > The process is wrong in that HRMC should be doing its job without having people pushing it to. Sure, but when they fail to do their job, any retrospective adjustments should be in favour of the taxpayer not the government. Imagine if a policeman stopped and searched your car (legally), and then later came round to your house saying "I didn't have my glasses on, so didn't search well enough. I want to search again".
    - srtjstjsj 6y ago
      I don't understand what's wrong with doing a job completely instead of giving up halfway through.
    - tolien 6y ago
      > Imagine if a policeman stopped and searched your car (legally), and then later came round to your house saying "I didn't have my glasses on, so didn't search well enough. I want to search again". Your analogy is invalid, though, because Uber made a legal declaration as part of their VAT return which was based on (at best) an untested interpretation of the law. Their original accounts weren’t the product of a search by HMRC that was incomplete, Uber gave them numbers which were later found to be wrong and asserted (under all the penalties associated with false tax declarations) that they were correct. A better analogy would be if you told a police officer that there weren’t any bodies in the boot of your car, but when they later looked (following a report from a passer-by) you had a collection of severed heads sitting in the back seat.
londons_explore 6y ago
Does this mean every business can now deduct VAT at 20% from every Uber journey taken for business purposes? If so, pretty much every business in the UK could be submitting revised accounts for the last 5 years...

26 points by davidgerard 6y ago

Wow, well done! Great to hear there are good folk out there fighting for the integrity of our public institutions. Everyone should have to play by the rules and keeping the state accountable to that end is an important task. This is really encouraging to see!

londons_explore 6y ago

Summary of the issue... VAT is kinda a sales tax in Europe. It means sellers must charge 20% on top of any sale, and give it to the government. Very small companies are exempt. Uber was arguing that they were just a platform like EBay, and that every individual driver was a small enough business that they didn't have to pay the tax. Uber paid the tax, but only on Ubers fee, not the total journey amount. This ruling is the government deciding that the tax was due on the entire journey.

srtjstjsj 6y ago
Isn't VAT supposed to be a Value Added Tax? Shouldn't the driver's expenses be deducted? Is personal labor service really subject to VAT? That's horrifically regressive, crippling the lowest paid laborers with VAT on top of income tax, instead of taxing the profit captured by the enterprise.
- MHard 6y ago
  It depends. I, as a freelancer, am required to ask for a VAT tax but my clients can balance out the VAT tax for the services they buy from me with the VAT they ask from their clients. Personal labour in the sense of employment is exempt from VAT tax if the person is employed but then other forms of taxes, like the income tax apply. The amount of tax as well as the form in which they are collected vary from country to country. My personal opinion is that the tax system is actually quite clear and progressive, at least for me as a freelancer. I can file my taxes online without any hitches and the amount to pay and deductibles are easy to get (at least in Germany and Spain). Then again this whole thing varies from country to country and Spain requires you to give quarterly justifications on the VAT tax you owe which amounts to a lot of paperwork but not too much in my mind.

londons_explore 6y ago

While I don't object to the outcome here, the process to collect this VAT in my opinion was wrong. It looks like Uber decided they'd found a loophole in the VAT law. The government reviewed it and agreed. A random third party (the goodlaw project) forced the government to reconsider and collect the tax retrospectively. I don't want to live in a world where a random third party can 'telltale' on me to the government after I've already been given the go-ahead. In my mind, the correct route for this should be that the third party asks the government to clarify the law, and then Uber is forced to pay VAT from that point forward.

user5994461 6y ago
The process is wrong in that HRMC should be doing its job without having people pushing it to. I however refuse to give credit to Uber for finding loopholes and trying to get some pseudo approval to use them. They know very well that they operating on the edge on the law and it might come back to bite them.
- londons_explore 6y ago
  > The process is wrong in that HRMC should be doing its job without having people pushing it to. Sure, but when they fail to do their job, any retrospective adjustments should be in favour of the taxpayer not the government. Imagine if a policeman stopped and searched your car (legally), and then later came round to your house saying "I didn't have my glasses on, so didn't search well enough. I want to search again".
  - srtjstjsj 6y ago
    I don't understand what's wrong with doing a job completely instead of giving up halfway through.
  - tolien 6y ago
    > Imagine if a policeman stopped and searched your car (legally), and then later came round to your house saying "I didn't have my glasses on, so didn't search well enough. I want to search again". Your analogy is invalid, though, because Uber made a legal declaration as part of their VAT return which was based on (at best) an untested interpretation of the law. Their original accounts weren’t the product of a search by HMRC that was incomplete, Uber gave them numbers which were later found to be wrong and asserted (under all the penalties associated with false tax declarations) that they were correct. A better analogy would be if you told a police officer that there weren’t any bodies in the boot of your car, but when they later looked (following a report from a passer-by) you had a collection of severed heads sitting in the back seat.

londons_explore 6y ago

Does this mean every business can now deduct VAT at 20% from every Uber journey taken for business purposes? If so, pretty much every business in the UK could be submitting revised accounts for the last 5 years...