Jolyon Maugham, QC, believes Uber should be paying VAT in the UK. And he intends to prove it.
The London-based barrister and founder of The Good Law Project (GLP) – which aims to use strategic cases to change the law and the society it underpins – had already announced his intention to take the taxi firm to court, and today made it official by hand-delivering a letter before action to Uber HQ.
The kicker? He delivered it by Uber.
A letter before action is a required formal first step before taking someone to court. It's intended to give them the chance to rectify the situation before things get serious. However, GLP's case is highly unlikely to be settled this way, because the letter is asking for something Uber can't give – at least, not without admitting it's liable for an enormous amount of tax.
We spoke to Maugham and the Good Law Project to get the details.
What is it you're suing Uber for?
GLP: We are suing Uber for a copy of a VAT receipt on a journey our Director, Jo Maugham QC, took to a client’s last week. The VAT on the journey is a matter of a couple of pounds. But the consequences for Uber of it being liable for VAT are enormous: it will have to raise its prices by up to 20% - and will have a historical VAT liability of tens if not hundreds of millions of pounds in the UK and across Europe.
Why are you suing Uber? Isn't that HMRC's job?
GLP: In a better world, we’d have confidence that HMRC wasn’t arriving at cosy accommodations with powerful corporate interests. But you learn the world you’re really living in when the Finance Minister of France accuses HMRC of entering into sweetheart deals with a US tech giant.
We think the public isn’t confident HMRC is behaving fairly, we believe this perception is damaging to trust in the 'Establishment,' we know the Government isn’t interested in addressing this state of affairs, and we’re not going to stand by.
Why Uber specifically?
GLP: Uber has arranged its affairs to dodge corporation tax, National Insurance contributions and VAT. It’s not alone in doing this – not that being in poor company is much of an excuse.
But what really paints the crosshairs on Uber’s forehead is a quirk of VAT law that allows us to demand a VAT receipt. This enables the Good Law Project to lever open a private conversation between Uber and HMRC in which there is considerable and proper public interest.
If you win, what happens? Do you get a pile of money?
GLP: Neither the Good Law Project or its Director has any financial stake in the outcome of the litigation. But we all benefit from a society when people pay the taxes they owe – and we can trust those we rely on to collect the taxes needed to fund public services.
What are you hoping to achieve with this action?
GLP: The Good Law Project thinks our politics is broken. Our Opposition Party isn’t at the races. Our Executive is only interested in Brexit. You have to use the courts to shine a light on tax avoidance – and on the damage that’s done to our democracy by the Government’s apparent failure to address it.
The crux of the GLP's case is that anyone registered for VAT who receives services that VAT is charged on has a legal right to claim a VAT invoice. At last year's employment tribunal, where it was decided that Uber drivers are legally classed as "workers," it was also decided that Uber offers transportation services – which are liable to VAT. Which Uber doesn't charge.
To pay for the action, the Good Law Project is crowdfunding with an initial goal of £75,000. This "will cover the bulk of our costs of bringing the case in the High Court. Our lawyers are all acting at considerably below market rate. But we are likely to need to raise a further sum both for additional legal expenses and to ensure that, because Jo Maugham has no private interest in the litigation, he is not personally exposed to the costs of losing."
Fair enough, lawyers have to eat too – and the UK stands to gain a lot more than £75k if the action succeeds. It could lead to a domino effect, with Uber not only having to cough up its VAT in the UK and across the EU, but other big companies who've dodged taxes having to follow suit and empty their pockets too. Plus, it'd be so damn satisfying to see them hounded for tax the way normal people are the night before the self-assessment deadline.
Uber's only comment on the case was:
"Drivers who use the Uber app are subject to the same VAT laws as any other transportation provider in the UK."
To which Maugham responded:
"It’s no great surprise that Uber continues to maintain it doesn’t provide transportation services. But the Employment Tribunal found that it did. And, as anyone who looks at Uber’s website, or uses its app knows, Uber is a consumer facing proposition."
If you agree, the crowdfunding page for the potentially groundbreaking case has just launched and will run for the next 30 days.
Main image © Ali Kate Cherkis