Taxi fares across the United Kingdom could increase by 20 per cent after a High Court ruled that companies, rather than drivers, are responsible for contracts.
The Times said that the ruling, which came following a legal battle with Uber, means that taxi companies could be responsible for charging VAT.
Under existing rules, private hire operators don’t pay VAT because the individual taxi drivers are classified as independent contractors. Therefore the companies don’t meet the required earnings threshold of £85,000 yearly.
However, the latest ruling, which has been dubbed ‘taxi tax’ by industry insiders could see companies liable for charging VAT. Uber has already increased its prices in response to the court ruling.
Meanwhile, taxi companies are calling on ministers to change the law to clarify that cab operators would be exempt from VAT.
The newspaper reported that the High Court case extended the ruling across the United Kingdom to include both online operators and minicab companies where drivers take payment directly from customers.
However, industry leaders allege the ruling has ‘sowed confusion’ and could result in the collapse of smaller firms.
Dave Lawrie, director of the National Private Hire and Taxi Association, argued that there has to be a ‘clear distinction’ between companies like Uber, which take money from customers up front, and small firms that take bookings on behalf of drivers who are then paid directly by the passenger.
Mr Lawrie added that the ruling could possibly lead to the ‘end of the self-employed business model at the expense of big firms like Uber’.
He described the situation as a ‘mess’ and said that officials were in discussions with the Department for Transport in an effort to ‘clear it up’. However, Mr Lawrie warned that if this doesn’t happen then there was a risk that everyone would have to charge VAT.
Joseph Jones, who runs Door2Door taxis in Southampton, echoed Mr Lawrie’s claims, saying that imposing VAT on fares directly impacts customers and drivers.
He warned a 20 per cent increase in fares would leave some passengers unable to afford their services, which would then reduce drivers’ earnings. Mr Joseph Jones suggested the change could ‘easily see tens of thousands of people leaving the industry’.
Meanwhile, taxi industry insiders said that there’s a ‘huge’ behind-the-scenes effort to get MPs to ‘take the situation seriously’.
The government seem to want to bring a tax out on everything, next, they’ll be taxing you for watering your garden. Our government have gone potty and they actually do need to see someone about their tax addiction. Their climate ruse won’t cut it this time while they’re merrily enabling countries to blow each other to bits. That definitely won’t do our environment any good, will it? With all those fighter jets in the air and tanks on the ground – we all share the same air, and now the government’s pants are down.
When will people realise that all taxes are a con? Our government just looks at any way it can rip its people off. I bet they’re rubbing their hands together as they steal from the poor to feed the wealthy who don’t need our money and never have. They just love to remove our money from us and transfer it to themselves.
Why don’t they just lock us all in a room, and feed us through a drip so that we can work 24/7, it’s just disgraceful how the taxpayers of this country are treated. They just feed off us just so they can feed their folly.
THE MONTHLY MOSQUITO 