Uber Faces Tax Crisis London

Recent report by the Uber Technologies In-cooperation in London has brought to light an interesting report as the United Kingdom seeks to give the Uber company a new classification as a transport provider, putting the company at a risk of incurring new tax charges that could weigh heavily on the business, this according to UK recent days accounts filings.

The new tax charges possibility comes as a great discomfort for the company and causes it further headache as it is coupling up with the regulatory problems which the ride-hailing company is facing in London, one of its largest markets.

Uber says that the tax charges are to be 20% on the gross booking fees or rather, the amount passengers are expected to pay or on the service fees normally accorded to drivers, typically about 20-30% of the entire fare. This situation will leave Uber no choice but to increase its passenger fee charges which will leave it vulnerable to the competition who have over the years been complaining about Ubers’ non-payment of VAT.

Uber said that it risked a back tax claim which could run to hundreds of millions of pounds as the charges could apply in both a retroactively and prospectively way. The company is defending itself vigorously by explaining its beliefs on Her Majesty’s Revenue and Customs. Currently, the structure of Uber is in such a way that for tax purposes, it exports digital services driver based in the United Kingdom from a Dutch subsidiary, Uber BV.  In future, Uber could be exposed to VAT because HMRC could deem its operation in UK to be a transport provider.

Uber failed to secure a 5 year term operating license by only being able to receive a 2 month London operating license in a battle with the regulator which has a history with the company of having stripped off its right to take rides.