Taxi firms crowdfund legal battle with Uber over VAT

Two British taxi companies have launched a crowdfunding drive for the last leg of a lengthy legal battle with Uber that could result in higher cab fares.

In February 2021, the Supreme Court ruled that UK-based Uber drivers were workers rather than self-employed, altering the company’s tax obligations.

Fast-forward to July 2023, and Uber has won a case at the High Court, meaning other taxi companies could soon be subject to the same obligations.

Uber will seek, at a supreme court hearing in July, a ruling on contractual models that affect whether VAT applies to private-hire companies outside London, which it has argued would level the playing field across the UK.

However, the minicab industry has fought the move, which it said could raise the cost of taxi journeys outside London by at least 20%.

Sustain their legal battle

The private hire firms Delta Taxis from Liverpool and Veezu from Cardiff are attempting to raise £500,000 to sustain their legal battle. Costs already exceed £1m after high court cases in 2022 and 2023, and a court of appeal case in 2024.

Uber was forced to add VAT to rides booked through its app after a ruling in 2021 regarding its fares in London. It then took legal action involving Sefton council in Merseyside – where Delta is based – over its terms for operators.

Battle with Uber over VAT on fares

Private hire vehicle (PHV) companies have usually classed drivers as independent, self-employed contractors and so do not pay VAT.

The industry argues that regulatory change would disproportionately affect passengers who rely on cabs, such as elderly people and those with restricted mobility in areas with poor public transport. According to Veezu, its data shows that 43% of minicab trips are for medical, work, or educational reasons, rather than leisure.

The cab firms have said that many small operators could be forced out of business, affecting an estimated 25,000 self-employed drivers, leaving passengers with fewer or no services.

David v Goliath moment

Paul McLaughlin of Delta Taxis said the appeal was a “David v Goliath moment”, adding: “This court case could have massive repercussions for PHV firms like us using the traditional agency model, which has been part of British culture for generations. If Uber win, it will add at least 20% to the cost of a private hire taxi fare outside of London … The impact will be felt far and wide.”

Nia Cooper, the chief legal officer at Veezu, said: “This case is about protecting the future of the private hire industry and the millions of passengers who rely on it every day. The private hire industry is integral to the transport network in UK and provides essential journeys to passengers, particularly those that are vulnerable.” As the firm doubles down on its battle with Uber over VAT on fares

An Uber spokesperson said: “Uber believes that there should be consistency throughout the UK to ensure all operators are required to have the same model.”