Lawyer to challenge Uber in High Court over 56p VAT
London lawyer Jolyon Maugham QC plans to bring a High Court case against Uber claiming it is not paying enough VAT and that it should provide VAT receipts to passengers. The case is based on the tiny sum of 56 pence ($0.73) - the unpaid VAT Maugham claimed was payable on a short Uber journey he took to a client's office. If judgement goes against Uber it could be forced to pay hundreds of millions of pounds in backdated VAT to HMRC. So far, the tax barrister has crowdfunded over £100,000 for the case. Uber rejects the claim, saying it does not provide a transport service but merely connects drivers with customers.
Devereux silk is claiming 56p

A leading tax barrister has crowdfunded over £100,000 to help him bring a 56p High Court challenge against Uber, over claims the app is undercharging value-added tax (VAT).

Jolyon Maugham QC, a tenant at London’s Devereux Chambers, first revealed plans to take on the US-based app giant in February. At the time, Maugham suggested Uber should be paying VAT on its fares at a rate of 16.67%, and in 2015 alone should have paid the UK government almost £20 million.

Now, several months on, Maugham’s CrowdJustice campaign has raised £107,650. According to legal documents filed with the High Court earlier this month, the tax silk received around 3,400 separate donations, with an average contribution of just under £32. Moreover, the papers reveal that Maugham’s campaign enjoyed a separate payment of £20,000 from an “organisation connected with the black cab trade.”

The new documents also shed light on the claim itself. Maugham — who is bringing proceedings against Uber London Limited via his non-profit organisation, Good Law Project — is arguing that it should have provided him with a VAT receipt for a short, £6.34 taxi ride he took between his chambers and a client’s office. His witness statement (embedded in full below) continues:

Immaterial complexities aside, if Uber has ‘supplied’ me with a service — as that word is used in a VAT context — then it has a statutory obligation to provide me with a VAT receipt… I believe — and as a QC specialising in tax I have some reasonable professional basis for this belief — that Uber has made a taxable supply of VAT purposes and that I have an entitlement to a VAT invoice.

Contrary to Maugham’s view, Uber — which has instructed Herbert Smith Freehills to defend the claim — maintains that it is not liable for VAT because it merely connects drivers with customers, and does not provide a transport service.

Furthermore, an update on the Good Law Project’s website states that it has received several legal letters from Uber stating it will “look to recover its costs” from Maugham if the claim fails. Stressing that this could land Maugham with a hefty bill, the statement continues:

This is no small matter: it is perfectly possible that Uber’s costs of litigating the matter will reach £1m in the High Court alone. And, absent costs protection, that burden will fall on him personally. Following that correspondence we took advice from a QC who specialises in costs. Having taken that advice we were able to issue proceedings. But we will need to resolve the costs issue early on in proceedings.

Speaking to Legal Cheek this morning, Maugham — who last year was forced to defend his working class background in the wake of pro-Brexit Twitter abuse — said:

It looks like we’re going to need to make some new and interesting law about the extent to which wealthy private litigants can drown out public interest litigation.

Read Jolyon Maugham QC’s witness statement in full below:

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