Uber is heading for a £1 billion-plus tax showdown with HM Revenue & Customs over VAT payments.
The Silicon Valley tech firm has, since March 2022, been required by the taxman to pay 20% VAT on its fares and delivery sales.
But the Sunday Times reports that the firm - which posted a £5.3billion turnover in the UK last year - believes VAT should only apply to its profits, rather than revenues.
Accounts filed at Companies House last week revealed that Uber has listed £63 million of VAT, forked out to HMRC in 2023, as a debt that it expects to recover. It paid a further £150million in January, and was more recently hit with a further £170 million bill.
“The payments do not represent our acceptance of the assessments,” Uber said in its UK annual report.
“We believe that we will be successful in our appeal, upon which the full amount of our payments will be returned to us with interest.”
Historically, Uber did not charge customers any VAT to be passed on to the UK taxman, arguing that it was a mere intermediary between customers and drivers, who would themselves be exempt unless they earned more than £85,000 a year.
Uber’s position changed when the Supreme Court ruled in 2021 that the firm’s drivers were “workers” and not self-employed. It subsequently agreed a £615 million settlement with HMRC following a claim over historic unpaid VAT.
At the time, Uber accepted that it was also liable for future VAT. But while HMRC instructed ride-hailing firms that a 20% charge should apply to whole fares, Uber argued that it should only apply to its profit on sales under a rule called the Tour Operators’ Margin Scheme (TOMS).