Uber must start charging VAT

Uber blog header

It’s safe to say that since Uber launched in the UK in 2012 it has had a huge impact and changed the industry forever. The convenience of being able to hail a lift at the touch of a button, see the cost of the fare before booking and paying online so no cash needs to exchange hands, has meant that many travellers prefer to book an Uber over a traditional taxi.

The way Uber’s business model was set up meant that they acted as an ‘Agent’ and the contract therefore was made between the individual driver and passenger. However a Supreme court ruling earlier this year ruled that UK private hire taxi operators must make contracts with their customers (don’t worry, this is a verbal contract, so you won’t have to sign a contract every time you call an Uber!). However, it means that private hire companies that reach the threshold and are VAT registered, need to charge VAT on their fares.

Uber challenged this ruling in the High Court but the High Court has now upheld the judgement meaning Uber who is VAT registered will have to start charging VAT on their fares. Uber has said this will increase their fare prices.

The good news for our clients that are VAT registered and use Uber, if you obtain a receipt you can reclaim the VAT.

So if your business is VAT registered, next time you call an Uber to attend a business meeting or for any other work related purpose, make sure you ask for a VAT receipt so that we can reclaim the VAT in your next return.

For more information on our VAT return service, check out our blog or visit our ‘work with us’ page to get started!