Uber’s rival taxi operators will not have to pay 20% VAT on their profits outside London after a UK supreme court verdict in a long-running case.
The court ruled that private-hire operators do not enter into a contract with passengers, dismissing an Uber appeal. Private-hire firms declared the verdict to be a “triumph for the sector” after a three-year legal battle, which they had said could end with fares rising sharply for passengers.
Uber had brought the case after a 2021 supreme court decision that its drivers were workers, which had an impact on its tax and other obligations.
The company sought a declaration that private-hire taxi operators enter into a contract with passengers and the high court in London ruled in its favour in 2023.
That decision meant that operators would have to pay VAT at 20%, but the ruling was reversed by the court of appeal in July last year after a challenge by the private hire operators Delta Taxis and the platform Veezu.
Uber appealed to the supreme court, which on Tuesday unanimously dismissed the US company’s case.
The Veezu chief legal officer, 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 which business model they adopt to run their business.”
She said the outcome would protect passengers from threatened fare increases and lessen the burdens on licensing authorities. “Uber was seeking a declaration that would have resulted in 20% VAT being charged on all PHV fares,” she said.
“This ruling also shows that British-owned businesses can stand up against global giants that attempt to use litigation as a tactic to shape the sector to suit their business model.”
An Uber spokesperson said: “The supreme court ruling confirms that different contractual protections apply for people booking trips in London compared to the rest of England and Wales. The ruling has no impact on Uber’s application of VAT, which has been upheld twice by other courts.”
In a separate case, the Estonian ride-hailing and food-delivery startup Bolt this year defeated an appeal by the UK tax authority HMRC on what exactly it has to pay VAT on at 20%.
HMRC has since been granted permission to challenge the ruling that Bolt is only liable for VAT on its margin, rather than the full cost of the trip, at the court of appeal.