Good Law Project Forces HMRC to Collect £1.5bn in VAT from Uber
goodlawproject.org
goodlawproject.org
VAT is kinda a sales tax in Europe. It means sellers must charge 20% on top of any sale, and give it to the government. Very small companies are exempt.
Uber was arguing that they were just a platform like EBay, and that every individual driver was a small enough business that they didn't have to pay the tax. Uber paid the tax, but only on Ubers fee, not the total journey amount.
This ruling is the government deciding that the tax was due on the entire journey.
Is personal labor service really subject to VAT? That's horrifically regressive, crippling the lowest paid laborers with VAT on top of income tax, instead of taxing the profit captured by the enterprise.
Personal labour in the sense of employment is exempt from VAT tax if the person is employed but then other forms of taxes, like the income tax apply.
The amount of tax as well as the form in which they are collected vary from country to country.
My personal opinion is that the tax system is actually quite clear and progressive, at least for me as a freelancer. I can file my taxes online without any hitches and the amount to pay and deductibles are easy to get (at least in Germany and Spain).
Then again this whole thing varies from country to country and Spain requires you to give quarterly justifications on the VAT tax you owe which amounts to a lot of paperwork but not too much in my mind.
If so, pretty much every business in the UK could be submitting revised accounts for the last 5 years...
It looks like Uber decided they'd found a loophole in the VAT law. The government reviewed it and agreed. A random third party (the goodlaw project) forced the government to reconsider and collect the tax retrospectively.
I don't want to live in a world where a random third party can 'telltale' on me to the government after I've already been given the go-ahead.
In my mind, the correct route for this should be that the third party asks the government to clarify the law, and then Uber is forced to pay VAT from that point forward.
I however refuse to give credit to Uber for finding loopholes and trying to get some pseudo approval to use them. They know very well that they operating on the edge on the law and it might come back to bite them.
Sure, but when they fail to do their job, any retrospective adjustments should be in favour of the taxpayer not the government.
Imagine if a policeman stopped and searched your car (legally), and then later came round to your house saying "I didn't have my glasses on, so didn't search well enough. I want to search again".
Your analogy is invalid, though, because Uber made a legal declaration as part of their VAT return which was based on (at best) an untested interpretation of the law. Their original accounts weren’t the product of a search by HMRC that was incomplete, Uber gave them numbers which were later found to be wrong and asserted (under all the penalties associated with false tax declarations) that they were correct.
A better analogy would be if you told a police officer that there weren’t any bodies in the boot of your car, but when they later looked (following a report from a passer-by) you had a collection of severed heads sitting in the back seat.
The "third party" here is a not-for-profit seeking to challenge injustice for the sake of the public good. HMRC failing to apply the law fairly is definitely an issue that affects the public and if it takes a third party like this to represent the people where the state has failed, more power to them!
For VAT there are time-limits for corrections. I believe it's 4 years for a mistake and 20 years where there are "deliberate inaccuracies". Both seem like very sensible timelines in relation to business risk. If you're at the edge of the law, you're going to carry a lot more risk so it might be worth following the spirit, not just the letter, of the law.
It is fair to say that this is a complex case though. It's unclear whether Uber truly is a platform or a service just as it's unclear whether its "staff" are contractors or employees. I think it's right that these definitions are grappled with by civil society. Where else should disagreements about these definitions take place if not in open court?