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Taxi firm acted as agent or principal?

18 March 2019
Issue: 4688 / Categories: Tax cases
Bryn Williams (TC6963)

The taxpayer was not VAT registered on the basis that he considered his taxable sales were less than the registration threshold. However that depended on an agency arrangement existing with his account customers (local authorities and government departments). The key questions were when rides were supplied to account customers were these provided by the taxpayer as principal with the effect that the gross fee was his taxable turnover?

Althernatively was the ride a contract between the self-employed drivers and the customer with the taxpayer taking a commission of between 10% and 40% of the fee – the latter fee charged as a payment deduction to the drivers?

HMRC considered that the taxpayer was acting as principal and created a backdated registration to 1 March 2009. The taxpayer negotiated the contracts with the customers; the cars bore his business logo; he received the money from the customers and...

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