Uber loses UK supreme court appeal over tax on private-hire rivals

Rival taxi operators will not face a 20% tax charge on their profit margins outside London

Uber's rival taxi operators will not have to pay the 20% VAT on their profits outside London following a UK Supreme Court ruling in a long-running case. The court ruled that private taxi operators do not enter into contracts with passengers, thus dismissing Uber's appeal. Private taxi companies declared the verdict a "victory for the industry" after a three-year legal battle, which they said could result in dramatically increased fares for passengers. Uber filed the lawsuit following a 2021 Supreme Court ruling that declared its drivers to be workers, affecting its tax and other obligations.

The company sought a declaration that ride-hailing operators enter into a contract with passengers, and London's High Court ruled in its favor in 2023. That decision meant the operators would have to pay 20% VAT, but the ruling was overturned by the Court of Appeal in July of last year following a challenge from ride-hailing operators Delta Taxis and the platform Veezu. Uber appealed to the Supreme Court, which unanimously dismissed the US company's case on Tuesday.

Veezu's legal director, Nia Cooper, said: "This decision is a triumph for the UK private hire sector. The unanimous verdict ends a three-year legal battle and confirms that operators can continue to choose the business model they adopt to run their business." She added that the outcome would protect passengers from potential fare increases and ease the burden on the relevant authorities. "Uber was seeking a declaration that would have resulted in the imposition of 20% VAT on all private hire vehicle fares," she said. "This ruling also demonstrates that British-owned companies can stand up to global giants who try to use litigation as a tactic to shape the sector to their litigation."

An Uber spokesperson stated: “The Supreme Court’s ruling confirms that different contractual protections apply to those booking rides in London compared to the rest of England and Wales. The ruling does not affect Uber’s application of VAT, which has been upheld twice by other courts.” In a separate case, Bolt, the Estonian ride-hailing and food delivery startup, this year rejected an appeal from the UK tax authority, HMRC, over the 20% VAT rate. HMRC has subsequently been granted leave to challenge the ruling in the Court of Appeal, which states that Bolt is only subject to VAT on its margin, rather than the full cost of the ride.