Many will have noted that the EU has ruled that Uber is not a tech company. It is, instead, a taxi company. What might be called ‘bleedin' obvious' common sense has prevailed. The decision, does of course, follow the decision in the UK that its drivers are workers and not contractors, which was more of the same common sense.
Jolyon Maugham, who has made Uber's abuse of VAT law one of his causes, has written an account of HMRC's total failure to reach the same obvious conclusion. I could quote it. I just suggest reading it.
But please do not miss the significance of the issue: if Uber is the contractor (and it is hard to see how it is otherwise now) then literally billions of VAT may be owed by it to tax authorities in the U.K. and around the world. And this matters. Tax abuse is at the heart of much of the gig economy. The apparent success of many companies in this sector does not come down to their ability to replace a phone call with an app messaging system. It has instead been about cutting out VAT and employer's national insurance at cost to the state, public services, fair competition and local services.
Maybe, just maybe, that process will be reversed now. But not thanks to HMRC, as Jolyon notes. They should be hanging their heads in shame.
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Totally agree. We all owe a great debt to JM for raising the issue and bringing it to the PAC’s and the public’s attention and to you for broadening public awareness.
I’m no lawyer but I vaguely remember that there is an ancient criminal offence called something like “fraud on the public purse”. Following the CJEU decision, if HMRC does not raise protective assessments going back 4 years against Uber by the end of its current VAT return period, someone should file a criminal prosecution against the head of HMRC.
It’s an issue Jo has already raised
I find this position on Uber genuinely annoying.
Whilst i dont see why Uber can’t be both a tech company and a transportation provider at the same time, Its what it does that should count for tax. Its economic activity is undoubtedly the provision of transport services. Its drivers are employees. Both have been proven in court. It should be taxed as such.
Ubers PR is at rock bottom and its new boss has said they will do what they need to to fix their image. They have an Amsterdam head office, so i assume they have a dutch sandwich arrangement and off shore cash available to throw where needed (for example, fighting ECJ lawsuits or settling fines for regulatory breaches).
This should be the easiest fight in the world for HMRC to win. In fact it would not be a fight. Can anyone other than HMRC take someone to a tax tribunal? Can we crowdfund HMRC?
The second thing is that this would all be avoided with some purposive tax legislation, but you already know that….
HMRC appears to have the greatest difficulty with the ‘bleeding obvious’
I often suspect that this is because it does not want to see it
Perhaps it has been made clear to these people that the way to progress your career at HMRC is to develop an inability to see the bleeding obvious?
I fear that may be true
It is called regulatory capture
I think HMRC has been in its upper echelons
Well, well.
So now HMRC will just drag its feet I suppose so that all the tax it could have collected is lost as Jolyon seems to be suggesting?
This goes beyond shame. There has been a coup. That is what it feels like to me.
Hi Richard,
I have a friend that works for HMRC who will undoubtedly be annoyed at this further example of the spineless nature of the organization. The higher up the organisation you go the less true this would be I suspect.
I think it is a mistake to believe that this situation is unintentional. The fact that the government will not invest more in HMRC enforcement (even though such investment would yield a healthy ROI) and that it doesn’t want it to have an independent robust culture probably means that tax evasion/avoidance is an unstated aim of government policy. I suppose the other explanation is that the government are all terribly thick – but I fear that would be being too kind to them.
Maybe I’m descending into full on paranoia and conspiracy land, but I think the general decision making of the government makes a lot more sense when viewed through the lens of the deficit being a brilliant opportunity to cut/privatize government services rather than something that they are really trying to fix.
I wish you were diving into paranoia but it is a fact that HMRC is deliberately underfunded to collect tax; does deliberately understate the tax gap and does not collect a great deal of tax owing, so supposedly justifying continuing austerity as a result.
That’s not paranoia. That’s fact.
And it’s the politics of this government