As Uber fights to retain its license in London, the company also faces questions over its tax structure and the fact that it does not pay value added tax on fares — concerns that were raised with the London transport regulator just weeks before it decided to revoke Uber’s license.
At least one board member of Transport for London raised Uber’s tax structure in writing, although tax is not under the purview of TfL.
According to an email sent to board members and TfL officials in August and seen by the Financial Times, Michael Liebreich said the question of tax was “relevant to Uber’s relicensing” and asked “how Uber [does not pay] tax in the UK on services it provides in the UK”.
Uber books all of its UK rides through a Dutch subsidiary, which allows it to avoid paying the 20 per cent value added tax charged on goods and services in the UK.
“I know tax is a question for HMRC, but I have never understood how Uber’s services can be London-based for the purposes of the Taxi and Private Hire Act 1998, but non-UK based for the purposes of taxation, in particular VAT,” wrote Mr Liebreich.
The email also raised concerns about safety and Uber’s use of “Greyball” software that blocks regulators from seeing the app in the city.
Mr Liebreich’s email was sent to almost 50 TfL board members, officials and assistants, including Helen Chapman, head of the taxi and private hire division, and Val Shawcross, deputy mayor for transport. Uber declined to comment on the email.
TfL did not cite tax in its decision to revoke Uber’s license, instead pointing to its concerns in areas such as reporting criminal offences and obtaining medical certificates and background checks for drivers, as grounds for the denial.
Uber will continue to operate while it appeals against the decision, a process that could take months. The company’s new chief executive Dara Khosrowshahi is weighing a trip to London to meet regulators.
Uber’s strategy to circumvent the UK’s 20 per cent VAT is not unique, but was the subject of a court case this year where the plaintiff sued Uber to demand a VAT receipt for an Uber trip. That case, which is still ongoing, could push Uber to collect VAT taxes if the plaintiff wins.
Uber argued in that case that it is only an agent acting on behalf of the drivers who are self-employed, and is not itself a service provider, and thus not responsible for collecting VAT.
Separately, the company’s lawyers will begin an appeal on Wednesday against an employment tribunal ruling last year that found its drivers were “workers” owed the minimum wage and holiday pay.