12 ms·

HMRC (UK Tax Authority) Persuing Uber for £386M (~$487M) Vat

54 points by gchadwick 3y ago

tmikaeld 3y ago
That's equivalent to their entire Q3 2023 net income, sounds like it's going to hurt at least a little bit.
- samwillis 3y ago
  It looks like it's just one years worth of VAT they are going after (rather than all previous years), hence ~20% of a years net income...
  - lotsofpulp 3y ago
    Assuming they continue to earn net incomes like the most recent quarter. Which they just did for the first time ever.
petesergeant 3y ago
Actually they’re required to pay it in order to dispute it, so it’s more like “Uber trying to get a £386M VAT refund from HMRC”
- regularfry 3y ago
  I'm morbidly fascinated by how the accounting for this works.
  - jimnotgym 3y ago
    Debit: liability account on balance sheet Credit: cost of sales Or you could just account for VAT properly in the first place like 99% of businesses manage to.
    - hsjqllzlfkf 3y ago
      World isnt black and white. If you believe you don't owe it, why would you account for it as if you did. In fact it just occurred to me, just imagine what it would look like in court if their internal books showed they accounted for it as if they believed they owe it, but didn't pay it. No, this makes perfect sense. Each side proceeds based on their interpretation and once a court rules that you're wrong, you correct.
    - raverbashing 3y ago
      > Or you could just account for VAT properly in the first place like 99% of businesses manage to. Ah yes but if you RTFineA it's not as clear cut And I kinda agree with them in this case. They shouldn't be liable for VAT on the whole of the trip cost.
      - deleted 3y ago
        [deleted]
      - petesergeant 3y ago
        > They shouldn't be liable for VAT on the whole of the trip cost I was going to reply to this to say "why not, everyone else does?" and then read the actual Tweet thread, which is very interesting. Thank you for encouraging me to read it!
    - jimnotgym 3y ago
      I can't believe i actually wrote that backwards!
  - mytailorisrich 3y ago
    They can probably keep the amount as asset on the balance sheet until court decision (at which point liability will be created if they lose). Instead of having it in the "cash in bank" account it moves to "cash at HMRC" account, or something like that.
emmet 3y ago
I was convinced this was going to be like the Irish government refusing 13bn USD from Apple, but no, they're actually going to have to pay it. Incredible.
- scandox 3y ago
  The Apple money is on escrow I believe so we may yet be forced to accept it.
cjrp 3y ago
I wonder if Uber were trying to pay VAT only on their portion of the fares, rather than the total amount or something.
- raverbashing 3y ago
  Yes if you read the thread they're trying to pay it as a Tour Operator
thedrbrian 3y ago
wonder how many other businesses could be profitable if they just stopped paying their tax bills.....
- kypro 3y ago
  Uber pays tax. HMRC are doing their thing and exploiting the complexity of the UK tax system to raise more government revenue. This type of thing happens all the time. In the UK you can work as an independent contractor for years then one day HMRC will randomly decide to make a case that you're were actually an employee the whole time and should have been paying a significantly higher rate of tax. The UK tax system is not explicit and open to interpretation so these disputes happen all the time if HMRC sees an opportunity. Given government spending is out of control and raising taxes doesn't win political points the complexity and interpretability of the UK tax system is now frequently being used as a weapon against UK citizens and businesses to increase government revenue. Uber paid their taxes as they understood UK tax law. Not legally complying with their UK tax liabilities as you suggest would obviously be insane. The issue here is that the tax system is designed to be exploited. At least in my opinion. People disagree with me though and believe that the complexity and interpretability of the tax system is done in good faith. It's a mistake to think this just impacts businesses: https://www.qdoscontractor.com/ir35/gary-lineker-wins-ir35-battle https://www.qdoscontractor.com/ir35/gary-lineker-wins-ir35-b...
  - berdario 3y ago
    The concern of tax rules being unclear and causing confusion and distress is a real concern, but that's off topic. Uber willfully misunderstood tax law to their advantage. Were most other taxi companies charging VAT as tour operator even before Uber started? If so, you would be right that this a concern of unclear rules and arbitrary application of them... But that's not the case https://www.accountingweb.co.uk/any-answers/should-taxi-firms-use-toms-for-vat https://www.accountingweb.co.uk/any-answers/should-taxi-firm... > Given government spending is out of control UK spending is barely above average for industrialised countries. After a decade of austerity, British people are getting poorer and poorer.
prima-facie 3y ago
Guys, I think we have finally found the NHS money. [1] [1] https://www.lbc.co.uk/news/350m-brexit-bus-nhs-social-care-pledge/ https://www.lbc.co.uk/news/350m-brexit-bus-nhs-social-care-p...
- ssabev 3y ago
  Would this be annual revenue for HMRC though?
- sph 3y ago
  Who they gonna sue next week?
- neilwilson 3y ago
  Except, of course, you haven't. That's not how sovereign currencies work. Especially Sterling. There is no direct connection between UK government spending (Supply) and taxation (Ways and Means). They are completely separate asynchronous processes from start to finish. [1]: https://gimms.org.uk/2021/02/21/an-accounting-model-of-the-uk-exchequer/ https://gimms.org.uk/2021/02/21/an-accounting-model-of-the-u...
sparkling 3y ago
From the Thread: >Until last year, Uber said this meant it didn't have to charge VAT. It was just the agent for its drivers. So - the argument went - don't look at Uber's £2.5bn of revenue... look at each driver's own small revenue. Too low for VAT. Doesn't this come down to what entity actually issued the invoice? When a UK customer gets the invoice for a ride, is it issued by Uber or by the individual driver/transport company? Not sure about the UK, but in most jurisdictions they operate the invoice is coming from the driver/transport company, not Uber. My understanding is that any fees or comission that Uber collects are handled in the background between Uber and the driver/transport company.
- tonyedgecombe 3y ago
  There was a judgement from the high court last year which said they aren't an agent. They were deemed to be the principle supplier.
- melx 3y ago
  in 2021[1] a Supreme Court ruled that their drivers are employees (and not self-employed people), so I suspect the invoice shall be coming from the company. Perhaps that's also why HMRC is pursuing the VAT for the past year or two. [1] https://www.bbc.co.uk/news/business-56123668 https://www.bbc.co.uk/news/business-56123668
  - pmyteh 3y ago
    The court found they were "workers" rather than employees. It's a sort of half-way status in English employment law for people who are neither employees nor self-employed. It provides some, but not all, of the rights of employment. Most relevant here, it guarantees minimum wage.
- cjrp 3y ago
  My latest invoice (03/03/23) says: “This supply falls under the Value Added Tax (Tour Operators) Order 1987.” And it does look like I wasn’t charged VAT.
  - 3y ago
tonyedgecombe 3y ago
It's interesting that HRMC didn't start this action. They were forced to by a independent nonprofit.
- melx 3y ago
  Having dealt with HMRC myself in topics from auth letters to paying vat every quarter... I'm not sure they exist* * They probably do exist, as I got hold of someone on their helpline after 4 weeks of trying. That I got something else than I enquired about is another matter.
  - dnh44 3y ago
    I’ve had to speak to HMRC quite a lot in the past couple years regarding VAT and PAYE issues and I almost always get through to a knowledgable and helpful person. The waiting time on hold seems to have gone up since covid though. The last few times I’ve called the wait has been between 30 minutes and an hour when before covid the wait was normally less than five minutes. I did once speak to someone that was quite hostile and unhelpful but after I finished the call I immediately called back and the person who picked up the phone was much more helpful. However whenever I’ve had to call for personal matters it’s been a bit more hit and miss.
  - dazc 3y ago
    Last time I had to contact HMRC involved a 5 hour wait in the call queue. However, the person who eventually answered was extremely helpful and understanding. Even gave a personal email address in case I needed to follow up.
  - tonyedgecombe 3y ago
    The last time I needed to contact them I wrote a letter. I got a reply about a year later but the issue was resolved.
ChrisArchitect 3y ago
What is the source of these screenshots with no alt text? Can we just get a link to the Uber post?
- ChrisArchitect 3y ago
  Uber Announces Results for Second Quarter 2023 https://investor.uber.com/news-events/news/press-release-details/2023/Uber-Announces-Results-for-Second-Quarter-2023/default.aspx https://investor.uber.com/news-events/news/press-release-det...
gumballindie 3y ago
Uber will be fine. The HMRC is pretty disfunctional, and usually chases contractors and their IR35 status. Easier to intimidate actual honest, hard working people, than a large corpo. A pathetic institution.

54 points by gchadwick 3y ago

tmikaeld 3y ago

That's equivalent to their entire Q3 2023 net income, sounds like it's going to hurt at least a little bit.

samwillis 3y ago
It looks like it's just one years worth of VAT they are going after (rather than all previous years), hence ~20% of a years net income...
- lotsofpulp 3y ago
  Assuming they continue to earn net incomes like the most recent quarter. Which they just did for the first time ever.

petesergeant 3y ago

Actually they’re required to pay it in order to dispute it, so it’s more like “Uber trying to get a £386M VAT refund from HMRC”

regularfry 3y ago
I'm morbidly fascinated by how the accounting for this works.
- jimnotgym 3y ago
  Debit: liability account on balance sheet Credit: cost of sales Or you could just account for VAT properly in the first place like 99% of businesses manage to.
  - hsjqllzlfkf 3y ago
    World isnt black and white. If you believe you don't owe it, why would you account for it as if you did. In fact it just occurred to me, just imagine what it would look like in court if their internal books showed they accounted for it as if they believed they owe it, but didn't pay it. No, this makes perfect sense. Each side proceeds based on their interpretation and once a court rules that you're wrong, you correct.
  - raverbashing 3y ago
    > Or you could just account for VAT properly in the first place like 99% of businesses manage to. Ah yes but if you RTFineA it's not as clear cut And I kinda agree with them in this case. They shouldn't be liable for VAT on the whole of the trip cost.
    - deleted 3y ago
      [deleted]
    - petesergeant 3y ago
      > They shouldn't be liable for VAT on the whole of the trip cost I was going to reply to this to say "why not, everyone else does?" and then read the actual Tweet thread, which is very interesting. Thank you for encouraging me to read it!
  - jimnotgym 3y ago
    I can't believe i actually wrote that backwards!
- mytailorisrich 3y ago
  They can probably keep the amount as asset on the balance sheet until court decision (at which point liability will be created if they lose). Instead of having it in the "cash in bank" account it moves to "cash at HMRC" account, or something like that.

emmet 3y ago

I was convinced this was going to be like the Irish government refusing 13bn USD from Apple, but no, they're actually going to have to pay it. Incredible.

scandox 3y ago
The Apple money is on escrow I believe so we may yet be forced to accept it.

cjrp 3y ago

I wonder if Uber were trying to pay VAT only on their portion of the fares, rather than the total amount or something.

raverbashing 3y ago
Yes if you read the thread they're trying to pay it as a Tour Operator

thedrbrian 3y ago

wonder how many other businesses could be profitable if they just stopped paying their tax bills.....

kypro 3y ago
Uber pays tax. HMRC are doing their thing and exploiting the complexity of the UK tax system to raise more government revenue. This type of thing happens all the time. In the UK you can work as an independent contractor for years then one day HMRC will randomly decide to make a case that you're were actually an employee the whole time and should have been paying a significantly higher rate of tax. The UK tax system is not explicit and open to interpretation so these disputes happen all the time if HMRC sees an opportunity. Given government spending is out of control and raising taxes doesn't win political points the complexity and interpretability of the UK tax system is now frequently being used as a weapon against UK citizens and businesses to increase government revenue. Uber paid their taxes as they understood UK tax law. Not legally complying with their UK tax liabilities as you suggest would obviously be insane. The issue here is that the tax system is designed to be exploited. At least in my opinion. People disagree with me though and believe that the complexity and interpretability of the tax system is done in good faith. It's a mistake to think this just impacts businesses: https://www.qdoscontractor.com/ir35/gary-lineker-wins-ir35-battle https://www.qdoscontractor.com/ir35/gary-lineker-wins-ir35-b...
- berdario 3y ago
  The concern of tax rules being unclear and causing confusion and distress is a real concern, but that's off topic. Uber willfully misunderstood tax law to their advantage. Were most other taxi companies charging VAT as tour operator even before Uber started? If so, you would be right that this a concern of unclear rules and arbitrary application of them... But that's not the case https://www.accountingweb.co.uk/any-answers/should-taxi-firms-use-toms-for-vat https://www.accountingweb.co.uk/any-answers/should-taxi-firm... > Given government spending is out of control UK spending is barely above average for industrialised countries. After a decade of austerity, British people are getting poorer and poorer.

prima-facie 3y ago

Guys, I think we have finally found the NHS money. [1] [1] https://www.lbc.co.uk/news/350m-brexit-bus-nhs-social-care-pledge/ https://www.lbc.co.uk/news/350m-brexit-bus-nhs-social-care-p...

ssabev 3y ago
Would this be annual revenue for HMRC though?
sph 3y ago
Who they gonna sue next week?
neilwilson 3y ago
Except, of course, you haven't. That's not how sovereign currencies work. Especially Sterling. There is no direct connection between UK government spending (Supply) and taxation (Ways and Means). They are completely separate asynchronous processes from start to finish. [1]: https://gimms.org.uk/2021/02/21/an-accounting-model-of-the-uk-exchequer/ https://gimms.org.uk/2021/02/21/an-accounting-model-of-the-u...

sparkling 3y ago

From the Thread: >Until last year, Uber said this meant it didn't have to charge VAT. It was just the agent for its drivers. So - the argument went - don't look at Uber's £2.5bn of revenue... look at each driver's own small revenue. Too low for VAT. Doesn't this come down to what entity actually issued the invoice? When a UK customer gets the invoice for a ride, is it issued by Uber or by the individual driver/transport company? Not sure about the UK, but in most jurisdictions they operate the invoice is coming from the driver/transport company, not Uber. My understanding is that any fees or comission that Uber collects are handled in the background between Uber and the driver/transport company.

tonyedgecombe 3y ago
There was a judgement from the high court last year which said they aren't an agent. They were deemed to be the principle supplier.
melx 3y ago
in 2021[1] a Supreme Court ruled that their drivers are employees (and not self-employed people), so I suspect the invoice shall be coming from the company. Perhaps that's also why HMRC is pursuing the VAT for the past year or two. [1] https://www.bbc.co.uk/news/business-56123668 https://www.bbc.co.uk/news/business-56123668
- pmyteh 3y ago
  The court found they were "workers" rather than employees. It's a sort of half-way status in English employment law for people who are neither employees nor self-employed. It provides some, but not all, of the rights of employment. Most relevant here, it guarantees minimum wage.
cjrp 3y ago
My latest invoice (03/03/23) says: “This supply falls under the Value Added Tax (Tour Operators) Order 1987.” And it does look like I wasn’t charged VAT.
- 3y ago

tonyedgecombe 3y ago

It's interesting that HRMC didn't start this action. They were forced to by a independent nonprofit.

melx 3y ago
Having dealt with HMRC myself in topics from auth letters to paying vat every quarter... I'm not sure they exist* * They probably do exist, as I got hold of someone on their helpline after 4 weeks of trying. That I got something else than I enquired about is another matter.
- dnh44 3y ago
  I’ve had to speak to HMRC quite a lot in the past couple years regarding VAT and PAYE issues and I almost always get through to a knowledgable and helpful person. The waiting time on hold seems to have gone up since covid though. The last few times I’ve called the wait has been between 30 minutes and an hour when before covid the wait was normally less than five minutes. I did once speak to someone that was quite hostile and unhelpful but after I finished the call I immediately called back and the person who picked up the phone was much more helpful. However whenever I’ve had to call for personal matters it’s been a bit more hit and miss.
- dazc 3y ago
  Last time I had to contact HMRC involved a 5 hour wait in the call queue. However, the person who eventually answered was extremely helpful and understanding. Even gave a personal email address in case I needed to follow up.
- tonyedgecombe 3y ago
  The last time I needed to contact them I wrote a letter. I got a reply about a year later but the issue was resolved.

ChrisArchitect 3y ago

What is the source of these screenshots with no alt text? Can we just get a link to the Uber post?

ChrisArchitect 3y ago
Uber Announces Results for Second Quarter 2023 https://investor.uber.com/news-events/news/press-release-details/2023/Uber-Announces-Results-for-Second-Quarter-2023/default.aspx https://investor.uber.com/news-events/news/press-release-det...

gumballindie 3y ago

Uber will be fine. The HMRC is pretty disfunctional, and usually chases contractors and their IR35 status. Easier to intimidate actual honest, hard working people, than a large corpo. A pathetic institution.