Uber, the ride-hailing and food delivery giant, is bracing for a major tax dispute with HM Revenue & Customs (HMRC) over £1bn VAT payments.
Since March 2022, Uber has been required to pay 20 per cent VAT on its fares and delivery sales, resulting in a total charge of £951 million by HMRC. However, Uber maintains that VAT should only apply to its profits, not its revenues.
In its latest accounts filed at Companies House, Uber revealed it paid £631m in VAT to HMRC in 2023, and listed this as a debt it expects to recover. In addition, the company paid £150 million in January and received another £170 million bill recently.
“Payments do not represent our acceptance of the assessments,” Uber stated in its annual report in the UK. “We believe we will be successful in our appeal, under which all of our payments will be returned to us with interest.”
Historically, Uber has not charged customers VAT, arguing that it is merely an intermediary between customers and drivers, who would be exempt from VAT unless they earned more than £85,000 a year. This position changed after the High Court ruled in 2021 that Uber drivers are “workers” and not self-employed, resulting in a £615 million settlement with HMRC over historically unpaid VAT and acceptance of future VAT liabilities. .
Uber says the 20 percent VAT should only apply to its profits from sales, using the Tour Operators’ Profit Margin System (TOMS). Last December, the Tax Court upheld rival Bolt’s claim that he qualified for TOMS, strengthening Uber’s position. HMRC is appealing this ruling, and the Treasury is currently consulting on potential changes to the VAT rules for privately hired vehicles.
Uber’s UK accounts reveal a profit of £29m on revenue of £5.3bn last year, with corporation tax paid of £4.5m. The company’s revenue rose 56 percent, partly due to the restructuring of the business in 2022.