Q&A: No forced VAT on private hire fares

The Supreme Court’s decision in DELTA Merseyside Ltd v Uber Britannia Ltd dismissing Uber’s appeal against the Court of Appeal’s judgment has avoided what could have been a seismic shift in the way thousands of operators across England and Wales structure their businesses and account for VAT. It also contains important lessons for tax advisers about the role contractual analysis plays in determining tax liability.

What was the case about?

The case centred on whether private hire vehicle (PHV) operators are legally required to enter into individual direct contracts for hire with passengers for each booking they accept. Uber having changed its own model in London following earlier litigation sought a declaration that the same requirement applied across the rest of England and Wales.

This matters because the contractual relationship between passenger and operator determines who is making the supply for VAT purposes. The government confirmed...