Uber: a third front

Followers of the Uber saga will remember this post, in which I explained why I was suing Uber for a VAT invoice, a case that could well end up costing Uber over £1 billion in VAT and interest.

Especially attentive followers of the Uber saga will also remember this post in which I said I was writing to HMRC to claim the input tax that, I think, should have been on the VAT invoice.

There are, as someone who takes Ubers a lot might say, many roads home.


Last week I was speaking about Uber at a conference about tax and employment matters. And, as my fellow panellists spoke, my mind drifted (listening is not a core skill of the Bar) and I began to wonder about UberPool.

If you’re a passenger of Uber’s, UberPool is like a cross between a taxi service and a bus. You get one of their taxis – but you share it with other people going in vaguely the same direction.

The UberPool model is especially interesting to accountants and investors. Here’s Bloomberg:


So. When you take a regular Uber taxi, Uber only includes as its revenue what it says is a brokerage fee – i.e. the bit that it doesn’t pay to its workers (i.e. the drivers). But when you take an UberPool, Uber includes the whole fare as its revenue. Why might that be?

The answer seems to lie in the difference between the fare structures Uber operates for those different models. (I should note that Uber operates different UberPool models in different jurisdictions).

When you take a normal Uber taxi you pay Uber a sum calculated by its time and distance algorithm, say, 100 and it passes on to its worker 75. But when you take an UberPool, you pay Uber 70 (a fare based on historical data as to what that trip will cost) and perhaps a couple of other passengers pay Uber 70. And what Uber pays its worker doesn’t just depend on what you and the other passengers pay it. It also depends on how many passengers share that UberPool taxi. The more passengers share the UberPool the lower the percentage that Uber pays to its driver.

When it operates UberPool, Uber’s fare structure makes it look even less like a broker supplying business-to-business services to drivers and even more like a principal supplying business-to-consumer services to customers. And that’s why accounting practice, which looks to economic substance over legal form, says that when Uber operates UberPool it is really acting as a principal.

That same idea – that Uber really contracts as a principal and not a broker – lies at the heart of the Employment Tribunal case that found drivers were workers supplying their services to Uber and Uber, in turn, was supplying taxi services to passengers. And if that’s right (indeed quite possibly even if its wrong) Uber should be charging VAT and handing that VAT over to HMRC.

But the Employment Tribunal reached its decision focusing on normal Uber taxis. If accounting practice is to be believed, it would have been even easier for the Employment Tribunal to reach that conclusion focusing on UberPool.

Similarly, my VAT case against Uber focuses on a journey I took in a normal Uber taxi. My case would be even easier if I took it in an UberPool.

Anyway. Back to the conference.

‘Why not?’ I thought. And after the conference I booked an Uber, my first since the journey the subject of my High Court claim, and pressed the UberPool button.

I now have an invoice for that UberPool journey. I believe (from the heretical position of “tax expert”) that it should be a VAT invoice. And I will seek to add it to the High Court claim against Uber. And I will seek to claim it back from HMRC in my next VAT Return.

10 thoughts on “Uber: a third front

  1. I’m surprised they haven’t Greyballed you yet…

  2. They did cancel my first Uber Pool and make me wait 9 minutes for the next one…

  3. Mr Maughan I must say I got a bit lost along the way but I think I’ve got the basics,just go for the jugular and the best of luck with the case

  4. Very well done sir 100per cent behind you.

  5. Excellent work. Did anyone else share the Uberpool with you ? Does it matter what Uber actually paid the driver for this trip ? I understand from previous stories that Uber has a stick for drivers who don’t accept Uberpool jobs. The Uberpool driver has no clue how much he is going to be paid with riders in his vehicle. How can that be acting only as an agent ?

  6. Someone else did. I have their contact details should it matter.

  7. Jolyon
    I hope you are listening. I believe you’ve got them and subsequently links both Uber and Uber Pool. Under one banner under one flag and under one VAT number. How can they keep shooting themselves in the feet!!
    Together with Dara K’s Apology ‘To All Londoners’ “we’ve got it wrong along the way.”

  8. Jolyon
    As I was once VAT registered you’ve got
    them. How could they have shot themselves in the feet!!’ (Foot). Just as Dara K has apologised to ‘ALL LONDONERS.’ We’ve got things wrong along the way!!!’ Well I’ve never known a CEO make such a massive gaff in writing on UBER paper and signed by him. Then put it into two newspapers. Apply this admission to your case. I am suing as you know a Small Claim. I think each and every Londoner should receive compensation.

  9. Nice to see someone who knows it all adds up may your court case be successful and this awful third party parasite start feeding its revenue back into the system and infrastructure it uses to earn its money.

  10. VAT is rarely decided in black or white terms. Whatever is counted as revenue is an accounting mechanism and arguably has no impact on the VAT treatment. The fundamental question remains, what is the service Uber provides and to whom?

    Uber say they provide a service to the driver and one presumes that this is a B2B service or is taxed locally where they are established. Whatever we think about the morals of their operations, there is a strong case that drivers act independently (and many want it that way) and Uber facilitate this. Fitting in an old VAT system from the 50’s to this is tough.

    One might presume that Uber has taken advice from one of your learned colleagues at the bar and presumably has advice that they have no UK VAT liability. HMRC will do nothing until the employment issue is finalised, and then probably nothing if Uber loses. I remain very sceptical that you can effect a change here, but it’s a great story!

    Will be interested to see if you publish this. Views my own not necessarily my employers.

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