Nine O’Clock’s Post

The Court of Appeal issued its decision in DELTA Merseyside Ltd & Veezu Holdings Ltd v Uber Britannia Ltd (“DELTA”) on 15 July 2024 and overturned the previous ruling in the High Court. This presents a problem for HM Treasury and HMRC. At face value, the VAT treatment of income earned by a private hire operator (“PHO”) now relies on a patchwork of UK licensing regulations, rather than VAT legislation. There are many instances in primary VAT legislation which rely on third party statute to establish the boundaries of VAT exemptions or zero-rating. By contrast, there is no precedent for third party statute to dictate the amount of VAT payable in different parts of the UK, based on similar or identical business models. We have an untenable position in which the obligation to pay VAT depends on a mixed bag of licensing regulations which are not designed to deal with VAT. In addition, the VAT position is being challenged in the Courts by Bolt, which has so far succeeded in its argument that VAT is only due on the margin by applying the principles of the tour operators margin scheme (TOMS). Finally, we await the outcome of the Government consultation on the private hire sector, which was based on the outcome of a High Court decision, which has been overturned by the Court of Appeal. Please read the article drafted by Naomi Quant and me for further thoughts on the issue. #vat #privatehire #mha https://lnkd.in/enczVq-E

#Bolt recently won a significant VAT-related case against HMRC regarding the application of the Tour Operators Margin Scheme (#TOMS). The dispute centered on whether Bolt, as a ride-hailing service, should pay #VAT on the entire fare charged to customers or only on its profit margin. The First-tier Tax Tribunal ruled in favor of Bolt, determining that it could use TOMS, which requires VAT to be charged only on the margin between the amount paid by the customer and the costs incurred by Bolt, not the full fare. This decision sets a precedent for the private hire sector and could impact other companies like Uber, which is preparing for a similar case in early 2024. #HMRC argued that Bolt's services, provided through independent drivers, were altered by Bolt’s involvement and thus ineligible for TOMS. However, the Tribunal rejected this, likening Bolt’s services to those of traditional travel operators that also fall under TOMS. HMRC is expected to appeal the ruling, potentially escalating the matter to higher courts This case could lead to broader implications for VAT treatment in the gig economy, especially concerning digital platforms and ride-hailing service

GST/HST requirements for taxi operators and commercial ride-sharing drivers in Canada. You are considered a taxi business for GST/HST purposes if you supply taxable commercial ride-sharing services. This means you must register for GST/HST, regardless of whether you are a small supplier. Self-Employment Status: Generally, if you own or lease a taxicab or motor vehicle for providing these services (whether for a flat fee or a percentage of fares), you are considered self-employed for tax purposes. This applies whether you are driving for a traditional taxi service or a commercial ride-sharing platform like Lyft or Uber. GST/HST Collection: Once registered for GST/HST, you are required to charge GST/HST on the fares you charge passengers. The rate of GST/HST depends on the province where the service is provided (5% GST federally plus provincial sales tax or HST where applicable). Effective Date of Registration: Your effective date of GST/HST registration is the day you start providing taxable passenger transportation services. Determining Employment Status: To determine if you are self-employed or an employee for tax purposes, you can request a ruling using Form CPT1 from the Canada Revenue Agency (CRA). Compliance: It's crucial to comply with GST/HST registration, charging, and remittance requirements to avoid penalties and interest charges. This includes filing GST/HST returns as per the CRA's guidelines. This ensures accurate compliance with GST/HST regulations for taxi operators and commercial ride-sharing drivers

🚨 Uber Drivers in Ireland May Owe VAT on Commissions! 🚖 Irish Uber drivers might be liable for VAT on the commissions they pay to Uber, a major concern for 11,000+ drivers. Unlike competitors, Uber didn’t remit VAT on these fees, leaving drivers vulnerable to potential VAT backpayments. While the Revenue is monitoring compliance, the financial impact is expected to be minimal. This raises the question: why didn’t Uber handle VAT like other companies? #VAT #TaxCompliance #Uber #Ireland #IndirectTax #Transportation

Historically, Uber did not charge customers any #VAT to be passed on to the UK taxman, arguing that it was a mere intermediary between customers and drivers, who would themselves be exempt unless they earned more than £85,000 a year. Uber’s position changed when the Supreme Court ruled in 2021 that the firm’s drivers were “workers” and not self-employed. It subsequently agreed a £615 million settlement with #HMRC following a claim over historic unpaid VAT. At the time, #Uber accepted that it was also liable for future VAT. But while HMRC instructed ride-hailing firms that a 20 per cent charge should apply to whole fares, Uber argued that it should only apply to its profit on sales under a rule called the Tour Operators’ Margin Scheme (TOMS). Last December, in a boost to Uber’s case, the tax tribunal found in favour of its rival Bolt’s claim that it should be eligible for TOMS. HMRC is appealing against this ruling. Meanwhile, the Treasury is consulting on whether to change VAT rules for private-hire vehicles. 🤔

Who Should Pay #VAT: Uber or Drivers? 🚖💼 The VAT landscape for platforms like Uber is more complex than it seems. Should the platform handle taxes, or does the responsibility fall on the drivers? Our latest case study breaks down these challenges in Ireland’s transport sector and reveals how competitors like Bolt or FreeNow manage similar VAT obligations. Find out more: https://lnkd.in/dmPq43Uh

🚨 **Critical Update for Irish Uber Drivers**🚨 I just read an insightful article by Killian Woods highlighting a major issue for Uber drivers in Ireland. Many drivers could be at risk of losing their licenses due to unpaid VAT owed to Revenue. If you’re an Uber driver, it’s essential to know that you’re liable for VAT on the payments you’ve made to Uber. Failing to clear any outstanding VAT could prevent you from renewing your tax clearance certificate, which is crucial for renewing your taxi license. This is a significant development as it could potentially force drivers out of the industry with a major impact to the public. #Uber #IrishTaxiDrivers #VATCompliance #TaxClearance

Enjoy the Tax Time: Tips for Uber, Lyft & SkipTheDishes Drivers Tax for Uber and Lyft Drivers – Tips to keep you safe in rideshare and delivery business Driving for Uber or Lyft offers flexibility, but it also comes with specific tax considerations. Here's a guide to help you navigate the tax landscape and maximize your returns as a rideshare driver. Set Aside 25% revenue from Lyft and Uber for Taxes All earnings from ridesharing are taxable. As an independent contractor, it's crucial to set aside at least 25% of your net business earnings for taxes. Be proactive to avoid surprises come tax tim...[...] Read Full Article: https://lnkd.in/g6ZxN-ny We appreciate your comments, likes and sharing with friends and colleagues. For more insights and a free consultation, visit https://777taxes.com and call us at (416)857-7570. #777Taxes #AccountantVaughan #Accounting #BusinessTax #CanadianTaxSystem #Lyft #LyftCanada #RideshareTaxTips #RideSharing #SkipTheDishes #Taxation #TaxRefunds #TaxSmartDriving #Uber #UberCanada

🚖 Did you know? The VAT treatment of private hire vehicles is undergoing significant changes. Traditionally, self-employed drivers below the VAT threshold didn't charge VAT. However, recent rulings have complicated this. In July 2023, the High Court ruled that Uber must act as a principal in contracts with its drivers, meaning Uber must charge VAT on the full fare. This sets a precedent affecting all private hire operators, who may now have to follow the same VAT treatment. Uber is advocating for a consistent 20% VAT obligation across all operators to level the playing field. While this could standardise VAT obligations, it might also increase costs for smaller operators. The industry is currently awaiting further clarification from HMRC, with consultations set to address these issues following recent rulings and appeals.

Welcome to March! This month's newsletter is up on the website with updates on the VAT treatment of ride hailing apps and proposed changes to, customs procedures and documentation relating to the entry and clearance of goods. Read more about the updates on the website https://lnkd.in/ekJZnDey #VAT #ValueAddedTax #Tax