Barrister Jolyon Maugham to pursue Uber for unpaid VAT
Uber is to face a legal challenge over allegations of not paying VAT. Founder of the Good Law Project Jolyon Maugham QC argues that the ride-hailing company should be charging VAT on its taxi services. Maugham therefore intends to sue the company for non-payment of this tax. Maugham estimates that Uber has a tax liability of just under £20m for London alone in 2015. If the case is successful, the company’s increased tax bill could threaten its business model.
Video report by ITV News National Editor Allegra Stratton

At a community unit centre in Hackney, rebellion is in the air.

After their legal victory against Uber last year, James Farrar and Yaseen Aslam are signing up other drivers for further claims against the company.

Their UPHD (United Private Hire Drivers) union has 150 names so far and hopes to have 1,000 by the end of March.

The GMB union claims to have already registered a similar number of complaints from drivers.

Last October, in a test case brought by the GMB union, an employment tribunal in London decided that Uber's drivers are "workers" and, as such, are entitled to greater employment benefits, including holiday pay and the national minimum wage.

Uber refuses to recognise these benefits and is in the process of appealing the tribunal's decision but, unless it is overturned, the judgment stands.

ITV News has learned Uber faces another legal challenge, this time for alleged tax avoidance. Jo Maugham QC, founder of The Good Law Project, plans to sue the company for non-payment of VAT.

Maugham argues Uber should be charging VAT on the taxi services it offers. Maugham calculates the company's tax liability for London alone in 2015 at just under £20 million. He is pursuing the money on behalf of the taxpayer.

Maugham is clear that Uber has developed wonderful technology which generates efficiencies from which we all benefit.

But he also believes the company may be gaming the tax system in a way that gives it an unfair advantage over its rivals and at a cost to the taxpayer.

I'm suing Uber to understand whether HMRC treats these big US multinationals including Uber with kid gloves. Jo Maugham QC, The Good Law Project

Uber officially launched in London in 2012, just before the Olympics, and has expanded to more than 25 cities in Britain, most recently launching in Cambridge.

Its meteoric success has been down both to its ingenious app and its ability to under-cut its rivals on price.

The company's "Uber for Business" service claims to be "23% cheaper" than Green Tomato Cars, a minicab rival in London.

If Maugham's case succeeds Uber would face a much higher tax bill and therefore higher costs. The company's business model is on the line.

You might think that allegations of tax-avoidance and mistreating workers represents something of an image problem but the company says there's no sign of a negative impact. The Uber app is being downloaded 30,000 times a week on average.

Last week Uber made a series of changes designed to mollify drivers who are upset. The company is now offering a free education course, free English language lessons, advice on pensions options (although no contributions) and a new FlexPay system that enables drivers to request wages outside the weekly pay round.

But Labour MP Iain Wright doesn't think the changes go far enough.

He is calling on Whitehall departments to stop using Uber as a supplier until it changes its business model.

This afternoon he has tabled a series of written parliamentary questions asking each government department to disclose whether staff have used Uber since the employment tribunal in October.

He is seeking to establish if the Prime Minister or her department is a member of Uber for Business and is asking the Chancellor, Philip Hammond, to investigate Uber's "potential VAT liabilities" on behalf of the taxpayer.

"The court ruling was very firm that these are not self-employed drivers," Mr Wright told ITV News.

They're not self-employed at all, they're actually employed by Uber and should have decent workers' terms and conditions. They should be treated fairly and at the moment they're not. I think government has a role to set an example to ensure that actually those drivers are treated with dignity and at least get the minimum wage. Iain Wright, Labour MP

These questions may well embarrass his own party. Last week a tweet by the Labour Whips' Office in the House of Commons suggested it uses Uber as a supplier.

A complaining tweet from the Labour Whips' Office appears to show it too relies on Uber cars.

Uber's legal headaches dissolve if it successfully appeals the tribunal ruling.

However the company's submission - that its drivers are self-employed - was rejected by the original judges with some force.

The panel pointed out Uber interviews and recruits drivers; sets both the price that passengers pay and the route the car takes; subjects drivers to a ratings system and requires them to accept trips when logged on to their app.

Uber has become a major rival to the traditional black cab and mini-cab business in the capital. Credit: PA

Uber describes itself as a technology company but the panel decided the company is in the mini-cab business.

Uber's argument that its network of drivers are a "mosaic of 30,000 small businesses linked by a common platform" was described as "faintly ridiculous".

The language used was strong. The judges described the documents Uber submitted to the court as containing "fictions, twisted language and even brand new terminology".

Uber said its drivers make average fares of £15-£16 an hour after the firm's fee. Credit: PA

The judges said the verbal evidence of Uber's UK CEO, Jo Bertram, was "grimly loyal" and her performance likened to Queen Gertrude from Hamlet, suggesting: "The lady doth protest too much, methinks."

Uber declined our offer of an interview but Ms Bertram offered a statement.

Almost all taxi and private-hire drivers in the UK are self-employed. At Uber we're proud that we give people the freedom to choose when and where they drive. Jo Bertram, Uber's UK CEO

She added that drivers make average fares of £15-£16 an hour after Uber's fee.

Ms Bertram said the company is appealing the tribunal decision because the "vast majority" of its drivers wish to remain self-employed, that all "are subject to the same VAT laws as any other transportation provider" and that a recent survey of drivers found that 92% of them believe Uber is "a good company to work with".