HMRC confirmed today that ride-hailing giant Uber would pay £615million in outstanding VAT payments.
It is understood that an agreement between the two parties was made earlier this week.
Uber initially feared facing a VAT bill above £1.5 billion after the February 2021 Supreme Court ruling. The ruling said that their drivers were Uber employees rather than independent contractors.
The VAT bill relates to the period before March 2022. It is understood that Uber changed its contractual arrangements and began to pay VAT to HMRC.
Uber had argued that it was the driver supplying the fare as principal. Meaning any requirement to account for VAT on the fare falling to the driver, who in the main wouldn’t be registered for VAT.
Although the ruling only related to Uber’s London operations, it is expected to apply across the UK. The ruling will confirm the extent to which the revised position will apply across non-London locations is due to be released later this week.
Today's Quarterly Financial Results for Q3 revealed that Uber would pay HMRC £615million next quarter (Q4).
"On October 31, 2022, we resolved all outstanding HMRC VAT claims related to periods before our model change on March 14, 2022. We do not expect any significant impact to the income statement as we have adequate reserves recorded as of September 30, 2022, related to this resolution," read the statement.
Concluding, "we expect a cash outflow of approximately GBP 615 million during Q4 2022 for this resolution.
Further HMRC scrutiny on taxi firms or delivery firms who use similar arrangements is now inevitable.
If you have any queries about VAT, or VAT more generally, please do get in touch.
