High Court case involving Sefton cab firms could impose VAT on passengers

Taxi fares across the country could jump by a fifth, depending on the outcome of a case involving several Liverpool cab companies.

The Sefton firms, including Delta, one of the biggest private hire operators in the country, are represented by Chester law firm Aaron & Partners.

The case has been brought by private hire operator, Uber, and has now reached a crucial phase.

Depending on a judge’s final decision, it could force the entire private hire industry to charge VAT on all journeys for the first time.

Uber already charges VAT on its journeys as a result of a series of court cases. Now it seeks to force the same condition on its competition around England and Wales.

If the ride-hailing firm is successful in its bid to sue Sefton Council over the terms for operators outside London, it could mean fares rising by a fifth across the UK.

The case in the High Court began hearing submissions last week with all arguments concluded on Friday. The judge has reserved judgment while she considers the arguments put to her.

Layla Barke-Jones, a partner in Aaron’s dispute resolution team, said: “We are pleased to have had the opportunity to represent the views of our clients in the High Court last week, and we hope to have done enough to protect one of the traditional models of the private hire industry.

“Whether it’s parents on the school run, the elderly accessing vital services such as shops and medical appointments, or people with disabilities travelling from A to B, private hire services are simply vital to communities up and down the country.”

The case comes after Uber revealed last week it was to hand £615m in tax to UK authorities, following the settlement of unpaid VAT.

The app had argued in the past that it was exempt from paying VAT, with its drivers classified as self-employed. A landmark court ruling later clarified its drivers were, indeed, classed as ‘workers’.

With Uber’s revenue massively exceeding the VAT threshold, the company started to charge passengers an additional 20% to cover VAT. Now, Uber wants UK private hire and taxi firms to do the same, and has launched a legal bid against Sefton Council to force them to do so.

Ms Barke-Jones added: “If the consequences of the declaration sought by Uber do arise, as warned by Delta and others, it is likely to bring about a significant rise in fares that will hit the pockets of those who can afford it the least.

“It would also come at a time when people all over the country are already feeling the squeeze of a cost-of-living crisis, with many other basic necessities starting to become unaffordable.

“Simply put, the magnitude and implications of this case will be vast and wide-reaching. We eagerly await its conclusion.”

A decision from the court is expected to be handed down before the end of the year.