Ground Transport Group - Private hire drivers welcome court ruling on VAT

Private hire drivers on Merseyside secured a victory for drivers nationally when a court ruled in their favour that fares outside the capital should not be subject to VAT.

Last month, the Court of Appeal overturned a 2023 High Court decision that PHV drivers and operators must enter into a contract with passengers, with fares subject to 20% VAT. Drivers and operators feared the sharp hike in fares would force many of them out of business.

VAT on fares

As reported by thebusinessdesk.com, the original case brought by Uber would not only have led to a large rise in fares, it would also have created a huge administrative burden for drivers and operators.

The importance of the ruling was recognised by Veezu, and other operators. Nia Cooper, Chief Legal Officer at Veezu, said: “The private hire industry is integral to the transport network and provides an income for self-employed driver partners and local private hire operators. It is often the only form of transport accessible to local communities on a consistent and reliable basis.

“The original ruling had the potential to drive up fares, reduce availability of services and put driver partners and operators out of business. The ruling by the Court of Appeal removes the burden on Local Licensing Authorities to invest in unnecessary policy changes and continue with the well-established processes already in place.”

Victory for the industry

Following the victory, Layla Barke-Jones, Dispute Resolution Partner at Chester law firm Aaron & Partners, told thebusinessdesk.com: “Today’s decision handed down by the Court of Appeal is a victory for the taxi industry and all those who depend on it.

“This was a landmark case, the result of which could have had a terrible impact on the lives of so many people – not to mention the administrative burden for operators.

“The collective aim for us and our client in this case has always been to protect passengers and taxi firms alike, so the news customers outside London won’t have to have VAT forced upon them will bring a collective sigh of relief.

“Vulnerable consumers caught in the crossfire of Uber’s lawsuit rely on the services offered by taxi firms. This frequently includes the disabled, elderly and low-income households. The Government recognised the potential impact of the initial High Court judgment by launching a consultation identifying that thousands of firms would need to change their operating model forcing them to now collect VAT from passengers.

“Delta Taxis, and fellow operator Veezu, rallied against it by appealing the previous decision up to the Court of Appeal – seeking a decision on appeal that would maintain the safety that the licensing regime provides and promoting fair and open competition for private hire businesses.”

Appeal

But the victory doesn’t mean the legal battles have reached the end of the road. An Uber spokesperson said: “We will review the judgment in detail and consider our next steps. This verdict means that the requirements for operators are now inconsistent between London and the rest of England and Wales.”

Since the ruling, Taxi Point has reported that Delta is expecting Uber to take the matter to the highest court in the land for a final decision which will determine how private hire operators will operate nationally.

Layla Barke-Jones, Dispute Resolution Partner at Aaron & Partners and representative for Delta Merseyside Ltd, said: “It’s difficult to say, because that decision rests with Uber. They have been refused permission to appeal at the Court of Appeal but can still request permission from the Supreme Court. We anticipate that they will seek permission to appeal, and we should find out if that is the case by ‘mid-August’.

“Following this, there will be a period while the Supreme Court, the highest court in the land, considers whether it will allow Uber to present its case before it.”

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