VAT and private hire – the long view

The High Court decision in Uber v Sefton Borough Council could result in VAT being added to cab fares for private hire operators.
This would be the largest increase in the VAT burden since 2010 and may disproportionately affect those who are least able to afford it.
Currently, private hire operators treat themselves as agents for private journeys, charging a fee to the driver for business introductions.
The driver retains the fare and is responsible for any taxes, including VAT.
However, the Sefton MBC case means that private hire operators cannot act as agents in London, most of England, and Wales, and must pay VAT on the full fare received by the driver if acting as a principal.
Using HMRC guidance that does not apply to specific circumstances would not be a defence against an HMRC assessment or a successful argument in court.