An epic court battle against Uber took another twist as the car-sharing giant came a step closer to being liable for a potential £1.5 billion in unpaid VAT.
The Good Law Project won a case against bosses at HM Revenues and Customs who must now reveal whether the agency has assessed Uber’s VAT tax liabilities last month.
But Uber subsequently filed an appeal against the decision before HMRC would have been forced to make the disclosure.
On Monday, the Good Law Project, which is run by anti-Brexit campaigner Jolyon Maugham QC, filed documents with the Court of Appeal to have Uber’s own appeal urgently thrown out.
Mr Maugham told the PA news agency: “The more time passes without an assessment being raised the more VAT is lost – forever.
“Whatever costs Uber run up pursuing a hopeless appeal will be dwarfed by the £4m or so lost every week if no assessment is raised. We hope and expect the Court of Appeal to give this ruse the short shrift it deserves.”
The Good Law Project initially attempted to take Uber to court to force them to disclose their tax affairs, but attempts for a protective costs ruling failed, making the case unviable financially.
Instead, the group took HMRC to court demanding the taxman assess Uber for VAT liabilities. It calculates that Uber could be on the hook for £1.5 billion.
HMRC had previously claimed it had made no assessment, but once the court case was launched, it declined to confirm whether the position had changed or not.
Uber argues that because it is a platform that brings drivers and riders together, rather than a transport business, it is the driver who is liable for VAT on any rides rather than the company.
But because the threshold for VAT is only for individuals earning more than £85,000 a year, none of the drivers need to charge it.
HMRC claimed in court its dealings with Uber were commercially sensitive information which could undermine confidentiality, but this was dismissed by the court.
Mrs Justice Lieven said she did not accept HMRC’s argument “that this approach would undermine taxpayer confidentiality because any third party could judicially review HMRC and then seek disclosure of the taxpayer’s affairs.
“Plainly, if HMRC thought that a claim was being brought as a fishing expedition, or simply to obtain confidential information, then it could and doubtless would defend the claim on that basis without disclosing anything confidential.”
She added that even if the case was simply about weighing up Uber’s right to confidentiality, “I would find that the intrusion into Uber’s confidentiality (or article 8 rights) is actually rather slight.
“The only information which at this stage HMRC want to disclose is whether or not they have made a protective assessment.”
Despite Uber and HMRC’s attempts to withhold any potential information through the courts, company documents show the firm recognises the VAT issue could heavily impact the business.
Uber Technologies’ accounts in the US say: “Losing the (case in which drivers can be classified as workers) may lead the UK tax regulator (HMRC) to classify us as a transportation provider, requiring us to pay VAT (20%) on gross bookings both retroactively and prospectively.”
The most recent UK accounts filed with Companies House also add: “The company is involved in a proceeding in the UK involving HMRC, the tax regulator in the UK, which is seeking to classify the company as a transportation provider.”
Uber declined to comment.
Separately, Uber is battling with the courts after Transport for London stripped it of its licence. The decision is under appeal.