Tuesday 13 January 2015 9:18 am

London cabbies demand government clampdown on Uber's tax arrangements

Over 20,000 taxi and minicab drivers are demanding the government clamp down on American taxi app service Uber in what may be the first major conflict between cabbies and Uber in London this year.

The drivers, many of whom are represented by the Licensed Private Hire Car (LPHCA), say they want to put an end to Uber's alleged "unfair" tax arrangements.

Chairman of the LPHCA, Steve Wright claimed Uber was benefitting from an "unfair competitive advantage" by operating via a company in the Netherlands. The LPHCA said in a letter to HMRC, seen by the Evening Standard:

[Uber] appears to have structured its (London) operation with the sole purpose of avoiding the application of VAT in the UK at the prevailing rate.

This is despite being a UK-registered company and a Licensed London Private Hire Operator, promoting its services in the UK and carrying out journeys in the UK for UK credit and debit cardholders

This is far from the first major complaint Uber has faced since setting up shop in the capital. In June, thousands of black cabs caused havoc across London protesting against regulator Transport for London (TfL). The protest was principally organised by the London Taxi Drivers Association, which objected to TfL's decision to grant Uber a private hire license.

Wright argued HMRC needed to review Uber's tax arrangements in the aftermath of EU changes to VAT. On 1 January, EU rules governing VAT were reformed so digital products will be charged VAT at the rate of the customer's home country.

If HMRC fails to look into Uber's case, Wright said:

The LPHCA will reluctantly recommend to our members that they adopt the same VAT treatment as Uber London Ltd. This will, of course, represent a further significant loss to HM Treasury, but we cannot continue to stand by and watch our members being disadvantaged by unfair competition.

An Uber spokesman said the company's tax affairs were in order:

Uber complies with all applicable tax laws … As such we are fully compliant with the tax laws of the United Kingdom and the European Union.