Reuters’ Tom Bergin Wrong Again – Uber Does Not Avoid VAT, Rather It Does Not Charge VAT
Uber was last night accused of exploiting a loophole to avoid paying millions in tax that helps it undercut rivals.
It was claimed that HMRC has missed out on about £40million in VAT from the controversial taxi app thanks to the legal but highly controversial tactic.
Ride-hailing apps are meant to pay 20 per cent VAT on booking fees they collect from drivers on each fare. But Uber avoids this by treating its 40,000 UK drivers as separate businesses, as most earn less than the £85,000 a year threshold for VAT registration.
This enables the American firm to offer cheaper fares than both traditional taxi firms and rival app-based services, while depriving the Treasury of millions of pounds in tax.
Forgive me because I don’t understand this claim. The booking service is offered by Uber. Why would it make a difference if each of the drivers was VAT registered or not? It’s still Uber offering the booking service, no?
Uber collects an estimated £200million a year in fares, meaning HMRC could be losing out on at least £40million a year in VAT, according to calculations by Reuters.
Ah, so the claim is that the total fee should be Vatable. Which it isn’t, is it? This is Tom Bergin again. Which does actually explain:
Uber avoids having to charge British value added tax on its booking fees by treating each driver as an individual business and then billing drivers across EU borders from its Dutch subsidiary, using an EU VAT provision called the “reverse charge”.
The rule lets businesses sell goods or services to other businesses across EU borders without paying VAT. There is usually no loss of tax revenue, because the importing business collects VAT from its own customers.
But since Uber drivers mostly generate less than the 85,000 pounds a year sales threshold to register for VAT in Britain, they don’t have to collect it.
Gett and mytaxi both bill their drivers from companies within Britain. As the reverse charge does not apply to domestic sales, that means that unlike Uber they must charge drivers VAT.
It is upon just the Uber fee, not the total amount. OK, great.
So Tom, who is it who is not paying this VAT? It’s not Uber, is it? It the driers who aren’t paying it.
But then Bergin likes Dame Margaret, Lady Hodge, and has even been known to speak of Lord Snippa Spud approvingly. So tax incidence isn’t going to be one of those things he gets right, is it?
But, more importantly, working for a PAYE employer will be considered a mug’s game compared with running a small company and paying 19% corporation tax. Even under Labour, someone earning £80,000 could swap a 45% tax rate for a 26% corporation tax rate.
There is tax to be paid again when the money is taken out of the company you fool.
The Tories meanwhile will make the situation worse by increasing the personal threshold further, taking even more people out of the tax system. Such a move will disempower future governments from helping the lower-paid through the tax system.
Yes, yes, he is this stupid. If we stop taxing poor people now then we can’t stop taxing them in the future.
All most fun. And proof that criminals are idiots of course. The only surprising thing here is that Daddy was a senior tax officer.
Basics – set up as a payroll processing company. Gain contracts to do the work.
Then don’t pay the correct PAYE.
I mean, yes, there’s more, but that’s the basics.
At which point criminals are idiots. The taxman is going to come looking for this money at some point. So you don’t spend it on cars and properties and watches and so on. Most certainly not in the tax jurisdiction you’re ripping off you don’t.
Suitcases of cash in some jurisdiction with no extradition treaty is the way to go.
Oh, and skipping just as the first letters start arriving asking where the PAYE is.
I’d like to see the details before I write about it serisouly but from what I can gather it’s an extension of stamp duty, not really an FTT.
Which is why it raises such a piddling amount of money. And also why it’s so crazily bad of course but I would like to see their actual proposal.
The Mail has been consulting Snippa again no doubt:
Last year, the tech giant was named as the biggest corporate tax avoider in the United States after booking $218.55 billion (£171.6 billion) of profit offshore last year.
The tech giant was able to save $65.08 billion (£51.1 billion) that it should have paid in tax thanks to its convoluted arrangements.
Annual profits were of the order of $40 to $50 billion. I really do seriously doubt that they dodged $65 billion in tax on that even at US rates.
The twats are attributing the accumulated amount over the decades to just last year.
The proposal also gets rid of almost all tax deductions, including those for state and local taxes. This creates a significant increase in tax for residents of high-tax states such as California and New York.
It’s been a huge distortion and removing it will cause no end of pain in those liberal strongholds.
Good. For people should pay the tax for what they voted for, shouldn’t they?
Tax Day Reading of Our Glorious Tax Code at IRS HQ in DC
This Tax Day, April 18, will see the first-ever public reading of our glorious Tax Code.
This riveting event begins at 7 a.m. in front of IRS headquarters in Washington, DC.
The good people of the Tax Revolution Institute will keep going until it is too dark to carry on, or they lose their voices.
The absurdity of the event is intended to match the 74,000-page absurdity of the tax code.
To witness this madness, go to the IRS building on Tuesday, April 18, located at 1111 Constitution Ave NW, Washington, DC — or watch live at TaxRevolution.us.
Google paid £36.4million in UK corporation tax last year – despite making a turnover of £1billion.
Liberal Democrat Treasury spokesman Susan Kramer said: ‘It is appalling that Google are still getting away with paying such a paltry amount of their total revenue back in taxes.
It’s a profit tax you ignorant git!
In 2005, Donald J. Trump married model Melanija Knavs, his third wife. That year, the real-estate mogul and newly minted TV star earned $153 million dollars, about $3 million a week. That’s far more than all but a tiny sliver of the U.S. population.
The newlyweds paid $36.6 million of that year’s take in federal income taxes, a rate of 24%, putting the Trumps in much the same tax league as any other two-earner professional couple making about $400,000 a year.
Or to put it another way, Donald Trump was paid that year like a member of the 0.001%, but he paid taxes like the 99%. And by at least one measure, he paid like the bottom 50%.
Average tax rate for the top 0.1 % in 2005 was 22.48%.
Between 5 and 10% (that couple on $400k, around and about) 12.61%.
It’s entirely possible to argue that US taxes aren’t high enough and all that. But arguing that Trump’s return here is anything out of the ordinary for his income bracket is, umm, well, misleading, nu?
The document offers a rare glimpse at how a super wealthy couple can manipulate and manage our complex tax laws to reduce their obligations far below rates paid by typical salaried professionals or even blue-collar wage earners.
But an average income tax rate of 24% is far above anything paid by typical salaried professionals or blue collar wages.
Tsk. And to get to the comparable number of 24% for that $400 k earning couple Johnston adds in social security….which isn’t income tax, is it?
The Trumps paid $31.3 million in AMT which, together with the regular tax, made their total federal income tax $36.6 million.
Viewed in terms of their positive income of almost $153 million the total Trump tax bill came to 24%. That’s in the range paid by two-income career couples who both work all year to earn about $400,000. The Trumps income was $418,460 per day.
Yep, that’s what he does, adds SS into that second tax bill.
Rents were controlled, public transport was cheap and plentiful and work was more secure, with the employer shouldering more of the national insurance costs.
NI is incident where?
Before Mrs Thatcher, many middle-class couples existed on one income, the women not working or only going back when their children were older, while many working-class women put in five half-days a week.
And it’s interesting to see someone supposedly on the left reviving the Kinder, Küche, Kirche idea, isn’t it?
Multi-millionaires are enjoying a “cosy” relationship with the taxman and receive a level of help and support that is not given to ordinary taxpayers, MPs say in a report.
Twisted, twisted, logic.
The MPs said that “HMRC’s approach to dealing with the very wealthy suggests that they get help with their tax affairs that is not available to other taxpayers”.
Phone calls and discussions with them are not routinely recorded – unlike those between HMRC staff and ordinary taxpayers – leading to the impression of an “overly close and inappropriate service to the wealthy”.
The MPs were concerned that around one-third of these individuals are under investigation at any one time, and is investigating cases with a potential value of £1.9 billion.
Yet since 2012, HMRC issued just 850 penalties totalling £9 million to them, an average penalty of £10,500 each.
The original concern was that these very rich weren’t paying enough, or rather not the right amount. So, specialist unit to deal with the very rich. Now the complaint is that there is a specialist unit dealing with the very rich. Further, the complaint is that most of them are obeying most of the law most of the time, which is why there are few prosecutions.
Thus we must change the system.
Figures showed that the tax take from this group of high net worth individuals fell by a fifth, equivalent to £1billion, over the past five years and while sums paid by ordinary tax players jumped by £23billion.
How have the taxes which weigh upon those groups changed over this time?
He knows council tax is not the fair way to raise funds:
The tax to fund councils is not the way to fund councils?
This from Polly, who tells us that property is hardly taxed at all in Britain?
The vision of a low-tax Britain that enforces fewer regulations in terms of workers’ rights has been a motivating force for a number of high-profile supporters of Brexit. However, in a letter seen by the Observer, Asscher writes that it is in the interests of both the UK and the remaining 27 EU member states that May’s government is prevented from creating a low-tax “neoliberal” outpost.
In a sign of the complexity of the trade negotiations to come, Asscher writes: “If you and I pay taxes, so should the large enterprises. Let’s fight the race to the bottom for profits taxation together, which threatens to come into existence if it is up to the Conservative UK government.
But a large enterprise is a legal person, not a natural person. And it is only natural persons who can carry the burden of taxation – on the simple grounds that there’s only us around.
The entire idea is thus stupid.
Business rates, which date back to 1601, are calculated according to the rental value of the property a company uses.
It leaves businesses with large premises paying huge annual fees, while online retailers that only need small buildings pay relatively low levies.
Yes, that’s the bloody point you fools!
3) as things stand, and applying the reasoning of the Employment Tribunal decision, Uber seems to be making VATable supplies to passengers of transportation services. And those services are standard rated. In practice, this means that, of every £100 charged to an Uber customer, Uber would have a so-called ‘output’ tax liability of £16.67 (being the VAT on such sum net of VAT as, when VAT is added, gives you £100). And it would need to hand that sum over – less any ‘input’ tax – to HMRC;
OK, seems reasonable. Easy test – does Addison Lee pay VAT?
But then there’s this:
(4) output tax is the VAT you charge your customers. And input tax is the tax you are charged by your suppliers. It’s the difference – the tax on the value that you add – that you hand over to HMRC. But does Uber have any input tax? Your employees don’t charge you input tax. Uber might have some external costs on which VAT has been charged – but not many. On the assumption (see (1) and (2) above) that the VAT reality of Uber’s business is that it is engaging drivers and supplying transport services to passengers, the vast majority of its expenditure will be the money it pays to drivers. But (with perhaps a tiny number of exceptions) drivers don’t charge Uber VAT on their fares. Indeed, they are incentivised to earn less than the VAT registration threshold. If they earned more, they would have to hand over 16.67% of their profits to HMRC in VAT;
Err, no. If it is, as a whole, a Vatable supply then as soon as a driver goes above the registration threshold then they must charge it to Uber. It doesn’t come from their “profits”, which is their labour income anyway.
Aren’t we lucky to have a system where a journalist needs to explain this to a tax QC.
A German plan to introduce a motorway tax for foreign cars has earned the wrath of other European Union members who have said they plan to challenge it in court.
The road charging system was approved by the Bundestag last year, but faced stiff opposition from the European commission which has called it discriminatory.
Following an adjustment to the plans agreed in Brussels on Friday the toll is now set to be introduced for foreign-registered cars. Cars registered in Germany will also pay but receive refunds in the form of tax deductions.
There is no problem at all with charging people for a sticker which allows them to drive on the motorways. The Czech Republic does it for example. It’s simply method of charging a toll but as an annual lump sum instead of per trip. Nowt wrong with it at all – it’s sensible even. Those who use a thing should pay for it.
The only problem with this is the idea that Germans should receive specific tax reductions for paying it. If they just lowered tax collection in general by the same amount then there would be no problem at all. So, why are they specifically trying to link a specific tax reduction to this specific road tax? That’s the bit which doesn’t make sense.
Trouble is, lip service doesn’t pay so well. Days after that interview, the recently ejected chancellor began a speaking tour of America. In just a month, it was revealed last week, he raked in £320,400. Osborne made more from five speeches (nearly all to the finance industry, naturally, and putting in what his parliamentary register records as a total of 13 and a half hours’ work)than the average British worker will earn in over 11 years.
So, that’ll be some £130,000 or so of American money that flows into HM Treasury. An appalling outcome we all agree Mr. Chakrabortty.
Philip Hammond will this week announce a raid on job perks enjoyed by millions of middle earners, including health checks, gym memberships and mobile phone contracts.
The Sunday Telegraph has learnt that the Autumn Statement will tighten rules that allow workers to forgo part of their salary in return for certain work benefits.
The move, described as a “stealth tax” by critics, will mean employees at big firms across Britain will be forced to pay hundreds of pounds to continue to receive perks they get through work.
The salary sacrifice schemes. The company provides you with whatever, gym membership say, you don’t pay income tax on it, they don’t pay NI.
It’s a not very sensible distortion in the system and as such should go. Pay the cash and let people buy what they want out of taxed income.
The biggest danger with these sorts of twee policies is the temptation it gives to idiots to add more things to the list of eligible items. Each addition just adding yet more distortion to the system. Gives those who would manage society a field day in “picking winners.”
Britain’s wealthiest people owe the taxman as much as £1.9billion, the National Audit Office has found in the wake of Theresa May’s pledge to crackdown on tax avoidance.
The spending watchdog said that one in six of Britain’s 6,500 wealthiest individuals have used tax avoidance schemes and admitted that HMRC has found investing whether they are paying the right amount “challenging”.
The use of a tax avoidance scheme does not show that tax is ue. Some forms of tax avoidance do actually work, after all.