Car-sharing giant Uber is a step closer to being liable for an estimated £1.5 billion in unpaid UK tax.
Campaigners have won an important legal step that could pave the way for the taxman to come knocking on the beleaguered firm’s door.
The move is on top of another legal challenge to stop Uber operating in London.
Uber has long-argued that it is a platform that brings drivers and riders together, rather than a transport business.
This means that it falls to individual drivers to pay VAT on any rides instead of the company itself.
But as the threshold for VAT is only for individuals earning more than £85,000 a year, none of the drivers need to charge it.
Campaigners from the Good Law Project calculates this has cost the public £1.5 billion in lost revenue so far.
The law team initially attempted to take Uber to court to force them to disclose their tax affairs but the case looked like being too expensive.
Instead, they challenged HM Revenues and Customs and demanded the taxman assess Uber for VAT liabilities.
HMRC objected, saying its dealings with Uber were commercially sensitive and it should not have to disclose whether or not it is investigating.
Today the Court of Appeal rejected HMRC’s arguments and Mrs Justice Lieven said HMRC now had to disclose whether or not they had made an assessment over Uber’s payment of VAT.
The case for the Good Law Project is being led by anti-Brexit campaigner Jolyon Maugham QC who said: ‘The more time passes without an assessment being raised the more VAT is lost – forever.’
Uber’s company documents show the firm recognises the VAT issue could heavily impact the business.
Their accounts in the US noted: ‘Losing the (case in which drivers can be classified as workers) may lead the UK tax regulator (HMRC) to classify us as a transportation provider, requiring us to pay VAT (20%) on gross bookings both retroactively and prospectively.’
The most recent UK accounts filed with Companies House also add: ‘The company is involved in a proceeding in the UK involving HMRC, the tax regulator in the UK, which is seeking to classify the company as a transportation provider.’
Uber declined to comment and has been contacted by Metro.co.uk.
Separately, Uber is battling with the courts after Transport for London (TfL) stripped it of its licence over safety concerns.
TfL found that in at least 14,000 Uber trips, drivers had uploaded photos of themselves to the app linked to cars which they were not registered to drive.
They said this meant that passengers were being picked up by drivers not named or authorised by the company.
The firm was stripped of its licence last month but can continue to operate until an appeal is heard.
Some 3.5 million people in London use Uber, which has 45,000 licenced drivers.