Thousands of taxi drivers have been put under significant stress because they are unsure of whether they will pursued by Revenue for VAT on the money they have paid in commission to Uber over the past five years, it has been claimed.
The problem has arisen after the drivers became aware Uber was not collecting the tax and paying it on their behalf in the way that rival platforms Bolt and FreeNow do, according to Derek O’Keeffe, who runs the online forum Taxi Drivers Ireland.
“It’s the first time in the history of the State drivers have ever had to contemplate paying VAT and it is all they are talking about at the moment,” he says.
“Uber has been operating taxis in Dublin for the last four or five years and what you have is many of the more than 11,000 taxi drivers in Dublin now asking if they are they subject to VAT and do they need to pay it for the last five years. For a lot of them, it’s absolutely scary.”
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The problem arises because Uber, like Bolt and FreeNow, charges drivers a commission on the fares paid by customers who book trips through it but, unlike its rivals, does not charge them VAT on these commissions and so does not pay it to Revenue.
Uber’s view, set out on its website and in a briefing document prepared for it by KPMG, is that while charges for transporting passengers are not subject to VAT in Ireland, the “lead-generation” services it provides to the drivers from the Netherlands are and it advises the drivers to register for and pay the VAT themselves.
The problem is a particular one for drivers as there are other reporting obligations involved and they are not able to claim VAT back on fuel or other work-related goods.
Responding to a query from The Irish Times, the Revenue Commissioners did not specifically say they would pursue the VAT but did say the regime here is subject to European law, and drivers would be liable where VAT has not been paid by a provider of services to them based outside the State. The Revenue said it will monitor drivers’ tax returns and other data available to it to assess compliance, and those drivers found not to have paid all monies due would not be able to obtain the tax clearance certificates they require to renew public service licenses.
Stephen Fennell, an accountant who advises a number of taxi drivers on their tax affairs, believes the amounts involved would be relatively small for most drivers, with the trouble involved in making returns potentially a bigger hassle.
“I don’t think the VAT liabilities here are extensive but from a driver’s point of view it’s a question of do they want the hassle registering for VAT and having to make VAT returns and be obligated for VAT compliance? Probably not. That may cause them to reconsider the use of Uber because the potential costs to administer this may be greater than the net VAT liability itself,” said Mr Fennell.
“I’d be more interested in the issue of why Uber are choosing not to charge VAT in Ireland. Why are they not playing by the same rules as FreeNow? And from Revenue’s perspective, if Uber were to charge drivers directly … it would simplify matters. Collecting VAT from one entity, as opposed to trying to collect it from 2,000, 3000, 4000 drivers … it’d be an administrative nightmare for Revenue Commissioners for perhaps little return.”
He estimates a typical VAT liability as about €300 per year, which could be offset against income tax, but Mr O’Keeffe says many drivers could pay €5,000 in commission to Uber each year which, over five years, would generate a VAT liability of €5,570.
“You don’t even know if they are liable for it,” he says, as drivers, he insists, were not even aware of the possibility until the last few weeks and there has been no communication from the Revenue Commissioners suggesting a liability.
“But if you are and you are a husband with a wife and a mortgage and three kids back to school, that sort of money is going to push someone over the edge.”
Mr O’Keeffe says he has struggled to get clarification from either Uber or Revenue.
Uber was approached for comment.
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