Uber is being sued for hundred of millions dollars for allegedly avoiding UK VAT | Hacker News Reader

Uber is being sued for hundred of millions dollars for allegedly avoiding UK VAT

qz.com

AirBnb charges and pays VAT in the UK and EU [1]. EBay charges and pays VAT in the UK and EU [2]. I understand that companies want to avoid paying taxes, but I wonder what the legal reasoning was that led Uber to decide not to. Uber needs to pick its battles better.

[1] https://www.airbnb.com/help/article/436/what-is-vat-and-how-...

[2] http://sellercentre.ebay.co.uk/business/about-vat

Uber is arguing that they aren't taking the money, but the driver is. And so the driver pays the vat.

Uber would have to pay VAT on the part they take from the driver though. Uber take what 30%? So if you had a £100 ride, the driver takes up £70. The driver will be under the VAT threshold and so doesn't have to charge VAT. However, Uber's £30 they took from the driver should have VAT. I've heard from drivers that Uber adds lots of fees so I wouldn't be surprised if they actually took £36 from the driver and charged him £6 VAT.

That VAT would go the UK government, but it would be offset by any expenses Uber incurs with VAT.

The UK want Uber to add the VAT before it goes to the driver. So the £100 ride would cost £120. Of which £20 would go the government, and the driver not pay anything (as he is an employee).

So not only are they trying to avoid paying less VAT but they are trying to avoid passing on the VAT to customer, making their prices seem cheaper when compared to people that do charge VAT.

But a black cab wouldn't normally charge VAT either, since they are self employeed and would be under the threshold.

The argument that "Uber isn't taking the money, but the driver is" seems like a difficult one to make (and I know that you are not making this argument) given that :

a) Uber actually collects the payment and then disburses some payment to the drivers. The amount paid to driver is variable over time as percentage of revenue.

b) Uber's model is not subscription based or something that clearly decouples Uber's revenue from the driver's revenue.

c) Uber initially subsidizes and pays drivers above and beyond the total market revenue to build liquidity.

So, in every possible way Uber's revenue is intertwined with the driver's payment.

I'm not sure black cabs would automatically be under the VAT threshold. It is currently £83k, so in a 6 day working week that is £270 per day. Not an unachievable sum for a London black cab.

But how much of that is cash. If it's cash they don't have to claim all of it. Easily putting them under the threshold.

Amazon, too, pays VAT in the UK.

Amazon pay VAT in the UK or they need to pick their battles better?

Oh sorry. Amazon pays VAT in the UK. Will fix comment.

I respected Uber when they started for pushing against bs regulations like, "you're drivers need to belong to a taxi union," or "stay away from airports."

But why screw with taxes? They won't win that fight. Why not just pay California a little bit of money to legally run their self driving cars? It'll cost them more in salaries to have a meeting about the issue than to pay it. And why not just deal with sexual harassment in the workplace? It's the right thing to do

Uber's most successful PR move was convincing everyone that using an entirely unethical, toxic company was sticking it to that monstrous boogeyman, "taxi regulations."

Shows how far you can go with a business model based on imaginary enemies and fairy tales about ethical consumption.

You are sticking it to a monstrous bogeyman, even as you use an entirely unethical, toxic company. The two things aren't mutually exclusive.

The NYC taxi cartel, in particular, which routinely sees all the consumer-protection parts of its regulations broken with zero consequence, deserves to die.

(By this I don't just mean the part which says the cab isn't allowed to ask you where you're going and refuse you a fare if you're inconvenient, or any petty act of casual racism through which they similarly refuse a fare, or just avoid certain neighbourhoods. I mean that I've had actual coworkers who were actually briefly kidnapped by someone who was driving the taxi illegally with someone else's license, which is utterly routine.)

Uber has all of those problems, but uses their mountain of VC cash to convince you they're exclusive to the taxi industry:

https://www.bloomberg.com/news/articles/2016-10-31/study-fin...

http://www.whosdrivingyou.org/rideshare-incidents#kidnapping...

http://www.whosdrivingyou.org/rideshare-incidents#Imposters

As you point out, a lack of consumer protections and appropriate policing is the cause of these problems. But they're endemic to this sector of the transportation industry, not taxi companies specifically. And Uber opposes these kind of protections anyway, so the idea that they're improving the situation is a joke.

What's the difference between the "bs regulations" like the "taxi union" and other regulations like tax? I'm not saying one is better than the other, but it's hard to appeal to the idea of "BS regulations" without admitting the possibility that VAT is BS.

Popular opinion. Uber are a populist company, political entrepreneurs as much as economic ones. People will call their representatives and show up for events to fight the taxi unions [1]. Few will do the same for tax dodgers.

[1] https://www.washingtonpost.com/opinions/ubers-bare-knuckle-b...

Or, conversely, that maybe "taxi union" regulations are not BS.

Either way, arbitrarily ignoring laws is not how one should run business in a civilized society.

Regardless of the merits of the suit, taxes are not regulations in the same way taxi union rules are: they are a way to provide the government with revenue. People may disagree about whether government should involve itself in the taxi business, but as long as we have one, we need a way to fund it somehow.

Uber needs roads. Uber does damage to roads. Uber should help pay for the roads.

The knives are definitely out now. The common theme is that almost all of these monumental blunders have to have been known and approved at the highest levels. I'm curious, what kind of leverage do VCs have on pushing for leadership change?

Please, the VCs are complicit in all this.

Click-bait.

It's not the ride that might cost Uber the money, it's the case that claims they are not paying the tax they should. The fact that the lawyer used Uber to take the ride to deliver the paperwork is ironic at best, more likely it's just irrelevant and used as, well, click-bait.

Maybe that's what's needed to get people to spend their limited attention on something.

The single ride they're referring to isn't the one to deliver the paperwork, it's the one which Jo Maugham is suing to get a VAT receipt for.

It's still very clickbait-y, especially as that guy is basically just trying to get PR for his firm so he can crowdfund the money needed to sue Uber (campaign is looking very sad at the moment with £4k out of £75k raised on day 3) and a warning that he will need to raise even more money if the case is to go through.

Changed the title to better reflect the article

It doesn't reflect the article now. The previous title was accurate. Uber isn't being sued for hundreds of millions of dollars. It's being sued for a single VAT receipt on a $12 ride. It's the precedent that would cost them hundreds of millions, but that would need another case.

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