Uber versus Sefton Council court case begins which could force VAT costs on all future PHV journeys
Updated: Nov 6, 2022
A major court hearing has begun today as ride-hailing giants Uber raise a case which could have serious repercussions for the entire private hire industry by forcing them to become VAT registered.
The court hearing, which follows Uber suing Sefton Council about VAT terms operating outside of London, could mean fares rising by a fifth if they are forced to become VAT registered for the first time since the 1970s.
Legal representatives fighting against the changes are looking to ‘protect the traditional models of the private hire industry’.
The hearing began this morning with an outcome expected before the end of this year.
Layla Barke-Jones, a Partner in the Dispute Resolution team at the law firm Aaron & Partners, is acting on behalf of a group of Liverpool-based taxi firms, including Delta Taxis. She said: "This case is a very important one that could have repercussions for the entire private hire industry in England and Wales and in particular on passengers during this cost of living crisis. Due to the wider significance of the case, we have successfully applied on behalf of our clients to be interveners and look forward to representing their collective views in the High Court.
“It is our intention to argue against the declaration sought by Uber from being made and we hope to protect the traditional models of the private hire industry that have existed before and after the 1976 Act came into force and differ significantly from what app-based services, like Uber, offer. On behalf of our clients we are seeking to prevent the unnecessary changes that will ultimately impact everyday people if the declaration were made."
If ride-hailing firm Uber are successful this week, the changes could force contractual arrangements with drivers and make all operators the principal for VAT on fares. This is likely to force the price of journeys up by one fifth.
Uber have long urged thousands of other private hire operators to follow their lead by making changes to their business models. Earlier this year Uber made big changes which included paying VAT on all UK journeys following a similar court case in London.
Transport for London (TfL), the UK’s biggest licensing authority, warned ALL Private Hire (PH) Operators to take ‘IMMEDIATE ACTION’ to make changes to their terms and conditions and ensure compliance.
If Uber win their court case with Sefton Council, ALL licensing authorities outside of London could then be forced to follow suit.
What are the exact details of the Uber / Sefton Council court case?
Essentially Uber are seeking High Court Declaration on model lawfulness in the ‘provinces’ after the London court case result.
Sefton Council sent out a notice to the attention of interested parties that describes the legal action below:
High Court Declaration Proceedings concerning the obligations of private hire vehicle operators licensed under Part II of the Local Government (Miscellaneous Provisions) Act 1976
In Uber London Limited v. Transport for London and others [2021] EWHC 3290 (Admin) the Divisional Court made the following declaration:
In order to operate lawfully under the Private Hire Vehicles (London) Act 1998 a licensed operator who accepts a booking from a passenger is required to enter as principal into a contractual obligation with the passenger to provide the journey which is the subject of the booking.
Uber Britannia Limited (“UBL”) is licensed by the Council as a private hire vehicle (“PHV”) operator under the provisions of Part II of the Local Government (Miscellaneous Provisions) Act 1976, which the Council has adopted to apply in its area.
UBL has commenced proceedings against the Council under Part 8 of the Civil Procedure Rules seeking the following declaration from the High Court:
In order to operate lawfully under Part II Local Government (Miscellaneous Provisions) Act 1976, a licensed operator who accepts a booking from a passenger is required to enter as principal into a contractual obligation with the passenger to provide the journey which is the subject of the booking.
