Erm why?

But please do not miss the significance of the issue: if Uber is the contractor (and it is hard to see how it is otherwise now) then literally billions of VAT may be owed by it to tax authorities in the U.K. and around the world. And this matters. Tax abuse is at the heart of much of the gig economy. The apparent success of many companies in this sector does not come down to their ability to replace a phone call with an app messaging system. It has instead been about cutting out VAT and employer’s national insurance at cost to the state, public services, fair competition and local services.

Yer average black cab driver ain’t charging VAT either. Nor the NI at issue here. What influence upon fair competition?

13 comments on “Erm why?

  1. AddisonLee are charging VAT and paying employer’s NI, though.

    The whole point about not registering for VAT is that it’s a tax simplification for businesses too small to do the paperwork. Über is hardly that.

    Also, a big percentage of black cab users are on expenses. And they can claim back VAT, so that large fraction of their customers wouldn’t care if VAT was added on.

    In respect of NI, if you want to object to Class 2/4 NI being lower than employer’s NI plus Class 1, then, well, you have a point.

  2. Tax abuse is at the heart of much of the gig economy.

    Or, another way of looking at it, the gig economy is the result of the conventional economy being too expensive and too highly-regulated for ordinary people to access in the manner they’d like.

  3. @ TH
    +1
    Also the gig economy and the million “self-employed” with low earnings are primarily caused by Blair’s National Minimum Wage which means too many jobs aren’t worth paying an employee to do them – but the self-employed don’t have a minimum hourly wage.

  4. “if Uber is the contractor (and it is hard to see how it is otherwise now) ”

    No its not hard, in fact its the other way round.

    Uber is just a platform that puts me in touch with a driver who may or may not accept the ride and I may or may not accept the driver. For that it takes a cut and passes on the rest of the fare to the driver.

    As opposed to having to stand on street corners in London waving arms like a demented traffic cop or digging through a ‘phone book to find a local hire company then try to explain where I am and where I want to go.

    If anything its hard to see that I’m contracting with the Uber rather than the driver, with Uber as not much more than a glorified ‘phone book which has my credits card details so I can’t abscond without paying.

  5. ????? Generally: travel is not VATable. Train tickets do not have VAT applied, air tickets don’t have VAT applied even for domestic flights.

    And this in particular:
    “Also, a big percentage of black cab users are on expenses. And they can claim back VAT, so that large fraction of their customers wouldn’t care if VAT was added on.”

    Black cabs do not charge VAT. They just don’t. If they did, any driver working for a VAT registered company would have to issue VAT invoices with VAT numbers and would have to explain why they were charging 20% over the value shown on the meter.

  6. “The whole point about not registering for VAT is that it’s a tax simplification for businesses too small to do the paperwork. Über is hardly that.”

    No. This idea stems from the misconception that charging tax is the default condition, hence ‘tax simplification’ is some form of bonus. It isn’t; tax is a variance from the default condition: no tax. The VAT threshold prevents small businesses from being burdened by this imposition. Über’s perceived size does not make taxation the natural state of things.

  7. “does not make taxation the natural state of things”

    Ironman – please submit yourself to the unimpressive end terrace in Ely for re education.

  8. And Uber aren’t Black Cabs (Hackneys), they’re Private Hire. And Uber itself is nothing more and nothing less than a bog standard Taxi Control and Dispatch Centre, as have existed since the invention of the messenger boy.

    You notice that whenever the media wants to interview anybody about these new Private Hire operators they talk to Hackney drivers, not other Private Hire drivers. But then, that’s the metropolitian navel-gazing that just is completely cannot comprehend the concept that Private Hire exists as a thing, as they’ve only had it in London for 20 years.

  9. jhg, I’ve told you before, there has been private hire (minicabs) in London since the 1960s, what has changed in relatively recent times is that now it requires a licence.

  10. “Tax abuse is at the heart of much of the gig economy”

    No, it isn’t. For one thing, many of these tax laws existed before then.

    The gig economy is happening because we all like gigs. Find a person complaining about the gig economy, and then ask them how many people they personally employ. And not as a manager with underlings in a large company. The answer is almost certainly none.

    And a whole load of tech has come along allowing what were salary or full-time jobs to become piece work/part-time/zero-hours/whatever. So they have become so.

    We have to adjust laws/government etc to this state, rather than this ridiculous fight against it.

    And with Uber, it’s all about the tech. It’s why the lefties/cabbies fighting them is going to be such fun. They think it’s about cheating, and it’s not. It’s about scale and efficiency of ride matching as a result. Fannying around the edges of taxation isn’t going to make much difference.

  11. Uber is a broker. What is the function of a broker? It is to put willing sellers in touch with willing buyers, for a small fee. Brokers increase liquidity. They enable transactions to occur that otherwise would not. They are wonderful things—one of the finest social institutions devised by the human race. They also operate best when most lightly governed. Of course Murphy hates them and wants to hinder them.

  12. djc: what you had in London in the 1960s weren’t Private Hire as, as you rightly pointed out, they weren’t licensed. There is a metropolitan memetic inertia that thinks that London is still like this, just like the brain-dead morons who lack the bit of their brain that allows them to notice that London has had 8-digit telephone numbers for more than 15 years.

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