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HMRC Pursues Uber for £386m VAT Bill

Published by Chirag
Posted Date: August 3, 2023 , Modified Date: April 18, 2024

Uber faces a tax dispute with the UK's tax authority, HM Revenue and Customs (HMRC), as the latter demands an additional £386 million in VAT payments. The disagreement revolves around Uber's use of the Tour Operators Margin Scheme (TOMS) for its UK business, potentially impacting the company's financials significantly.

Applying TOMS to Uber's Services

TOMS requires businesses in the tour and travel industry to pay VAT on their margin, not on the selling price. Uber contends that TOMS should apply to their services, arguing that not using the scheme could lead to increased fares for passengers.

Uber VAT issue

HMRC challenges Uber's application of Tour Operators Margin Scheme (TOMS), arguing that the company plays a more extensive role than a typical travel agent. According to HMRC, Uber shapes every aspect of the services provided by its drivers, making them more akin to employees rather than independent travel agents.

The Ongoing Dispute and Its Industry-Wide Impact

The ongoing dispute holds significance for the ride-hailing industry in the UK and beyond. Businesses and tax experts await a resolution that clarifies TOMS' applicability to Uber's operations, setting a precedent for the sharing economy.

TOMS' applicability to Uber's operations

This isn't Uber's first UK tax challenge. In November 2022, they paid £615 million to settle an investigation into unpaid VAT. Previously, Uber claimed VAT exemption, which was invalidated by a Supreme Court ruling that classified their drivers as employees. 

A court date is yet to be set for the current case, and both parties hope for a swift resolution. The outcome may have implications for other firms in similar industries.

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