wonder how many other businesses could be profitable if they just stopped paying their tax bills.....
This type of thing happens all the time. In the UK you can work as an independent contractor for years then one day HMRC will randomly decide to make a case that you're were actually an employee the whole time and should have been paying a significantly higher rate of tax.
The UK tax system is not explicit and open to interpretation so these disputes happen all the time if HMRC sees an opportunity. Given government spending is out of control and raising taxes doesn't win political points the complexity and interpretability of the UK tax system is now frequently being used as a weapon against UK citizens and businesses to increase government revenue.
Uber paid their taxes as they understood UK tax law. Not legally complying with their UK tax liabilities as you suggest would obviously be insane. The issue here is that the tax system is designed to be exploited. At least in my opinion. People disagree with me though and believe that the complexity and interpretability of the tax system is done in good faith.
It's a mistake to think this just impacts businesses: https://www.qdoscontractor.com/ir35/gary-lineker-wins-ir35-b...
Uber willfully misunderstood tax law to their advantage. Were most other taxi companies charging VAT as tour operator even before Uber started? If so, you would be right that this a concern of unclear rules and arbitrary application of them...
But that's not the case
https://www.accountingweb.co.uk/any-answers/should-taxi-firm...
> Given government spending is out of control
UK spending is barely above average for industrialised countries. After a decade of austerity, British people are getting poorer and poorer.
"Spending per cent of national income" it went down every year, from around 2009 until the pandemic.
https://obr.uk/forecasts-in-depth/brief-guides-and-explainer...
You can try and redefine austerity into whatever best fits your politics if you like.
I guess my point is that there is clearly a precedent for success by doing this sort of thing. Unfortunately.
I assume you're referring to the IR35 laws - which were brought in specifically to combat a form of tax avoidance by highly paid contractors on long-term projects, who functioned exactly like employees (by being a contractor instead of an employee you could save a whole bunch of tax in the UK).
Yes, IR35 is a complicated pain - but everyone and their dog in the UK tech scene knows that contracting is/was the way to pay less tax. So it makes sense that HMRC is attempting to close the loophole.
> Uber paid their taxes as they understood UK tax law.
They were specifically attempting to use a loophole to avoid paying VAT the standard way (by claiming they're a "Tour Operator"). They've already lost multiple cases around the world for doing similar bad-faith interpretations of laws - so I think in this case it's Uber doing the exploiting.
"pay less tax in exchange for less job security and fewer benefits." Fixed it for you.
VAT isn't a particularly complicated tax. This dispute relates to the fact Uber tried and failed to convince UK courts that its drivers were self employed under UK law so it lost its grounds for only owing VAT on commissions. (afaik they hadn't provided any mechanism to pay VAT invoices to the minority of drivers with self-employment earnings over the VAT threshold, so it's difficult to argue they were doing their level best to comply with VAT law under the "self employed contractor" model anyway)
However VAT is generally pretty clear, and we know Uber skirt every law and tax liability they possibly can. Looks like it’s time to pay the piper…