4 minute read
Where did that year go?
It’s that time of reflection again, although as always when we come to this point, most drivers and operators are too busy to worry about anything until things calm down in January.
So, let’s just muse upon our trade, its recent past and future and the rather strange place we are in. No pandemic talks anymore; the big issues are driver shortages and pending legislation. However, welcome to my version of the year. Not all views expressed are mine by the way, just a reflection of the how the trade heard it.
UBER LOSES
In January Uber had yet another Court date. The App Drivers Union finally got a win for a group of ‘workers’. The ruling made it even clearer that, in the eyes of the press, private hire drivers are workers. I disagreed because the appeal was at the Supreme Court, but the ruling was at tribunal, And that means, despite the win, ‘worker status’ has not been implemented to any great extent anywhere.
In some cases, operators have adopted a ‘Self Employed Plus’ style. This is a compromise, but the court judgment doesn’t specifically outline the way that operators need to act to honour their driver’s status. This doesn’t mean to say it won’t happen in the future.
The case was really testing whether Uber’s operations were compatible with London’s regulations, leading to the now infamous Uber v TFL v ADCU and the recognition of passenger as principal. This led to THE big VAT debate.
UBER AGREES TO PAY £615M TO SETTLE OUTSTANDING VAT CLAIMS
In November, Uber appeared once again in the headlines. The company had agreed to pay HMRC £615m to settle outstanding VAT claims. In reality the sum was much lower than the £1.5bn the taxman had reportedly raised in VAT assessments.
Having previously claimed that it should only pay VAT on the commission it receives from the driver, the tech company had seen its perception of itself turned upside down. The VAT-onfares arguments go a little like this.
The word ‘principal’ means principal for tax, therefore if the Uber judgement with Transport for London also means that, then if Uber wins against another authority (Sefton) it goes countrywide. That case will bleed into 2023, so watch this space.
HMRC LAUNCHES CONDITIONALITY TAX CHECKS
From April 2022 in England, taxi and private-hire drivers had to undertake tax checks to renew their licenses. If drivers aren’t registered for tax, they can’t get licensed.
Eazitax of course launched a big campaign, empowering operators to educate and drivers to address this issue and continue earning a living. (C’mon, I’m allowed one plug, please, we did it all for free!). Where did the tax checks lead… 4,000 drivers received an unwelcome letter from HMRC.
From February and for months afterwards, 4,000 taxi and private-hire drivers that use platform apps got a letter asking for full disclosure on earnings. HMRC was urging drivers to make a ‘voluntary disclosure,’ the wording implying that HMRC knows that they have undeclared income. This one is set to run and run, but we have it under control.
THE GOVERNMENT GIVES NEW GUIDANCE ON EMPLOYMENT STATUS
The government presented new guidance to help individuals and businesses understand what employment rights they are entitled to. However, to summarise, after four years of detailed discussions, the government has decided not to legislate clearly on this topic.
Instead, they gave guidance, equating to ‘a suggestion to courts, not a direction to courts.’ This left advisors like me in the same position we were in before the guidance, making educated guesswork in a maze of legislation.
WHAT’S HAPPENING IN 2023?
Is Making Tax Digital on the horizon? Definitely Maybe. The treasury is set to announce another delay to rolling out its MTD scheme again. The scheme was for self-employed individuals. That’s a big relief for the 4.2 million who feared being forced to file their taxes quarterly for the April 2024 deadline. That being said, it is still coming, eventually.
PRIVATE-HIRE FARES RISING?
If the government takes too much of an interest, the Sefton Council case could move in that direction. This could mean fares rising by a fifth across the UK. Its still unclear where the trade is on VAT on fares:
The Government won’t comment properly yet n We have some early adopters of this (non-existent) VAT regime
HMRC taking it on a ‘case by case’ basis. The one thing that is obvious is that that company based in Silicon Valley is now seeking to force its competition in UK to adopt this regime. We will see.
