Way back in April 2017, we announced we were going to take on HMRC’s failure to assess Uber to VAT which corroded public trust, not only in HMRC, but in politics more generally. 

And it’s been quite the scrap… 

There have been lows – like us spending the money we raised in the crowdfunder trying to get a protective costs order and failing. 

And there have been highs – like us persuading the High Court late last year that a fairly spineless HMRC was allowed to do what the legislation plainly allowed it to do and tell us it had (at last) assessed Uber.

There have been further lows – as last week when the Court of Appeal refused us permission to bring our judicial review against HMRC.

But ultimately we triumphed. Uber’s US accounts now confirm that HMRC has assessed Uber to VAT on fares – both prospectively and retrospectively.

And that’s all we ever wanted. 

It’s been a long, bumpy (and expensive) ride – if you’ll allow me the metaphor – but we have reached our destination. I am so proud that together we have forced HMRC, belatedly, to act – Uber has now been asked to pay the £1.5bn of tax they owe the public purse.

We couldn’t have done it without your support. So thank you.

I’d also like to thank the lawyers – George Peretz QC, Jack Anderson, Hui Ling McCarthy QC, Christopher Knight, David Greene, Vikram Sachdeva QC, and Alex Rook – who helped out, most for even less than the smell of an oily rag, along the way.

After years of pressure from us, funded by you, Uber now accepts it is likely to have to charge VAT to its customers and hand over unpaid VAT to HMRC. 

We know this because it has told us that under its US accounts it will recognise a contingent liability. And as I understand matters (I am not a US accountant) a company recognises a contingent liability, as Uber has done, when it thinks it has a more than 50/50 prospect of having to pay it. So Uber thinks it has a more than 50/50 prospect of having to charge VAT - and hand over unpaid VAT. 

You can read more in the Financial Times here. We will continue with our judicial review proceedings until we have absolute clarity - and our next hearing is on 6 November. We will report further as more information comes to light.

Thanks for your support,

Jo Maugham QC

Earlier this week we heard that the Court of Appeal had refused us permission to appeal against the decision not to make a protective costs order.  This confirms us in our choice to switch strategy to a judicial review of HMRC's failure to raise a protective assessment against Uber.

As matters stand, we have a hearing on 6 November to consider HMRC's application that key elements of its case not be made available to the public. Uber will be attending and arguing that HMRC should not be able to disclose anything about its affairs to us - despite the very clear language of section 18(2)(c) of the Commissioners of Revenue and Customs Act 2005. We will say that this is a case about securing public confidence in the proper administration of the tax system cannot sensibly be heard out of public eye. Let the sun shine in, we say, and let the people know why, remarkably, HMRC appears to be allowing Uber to dodge hundreds of millions of pounds of tax every year.

Although we were forced to pay Uber over £100,000 of costs (consuming almost the entirety of what we raised) we do not presently plan to ask for further funding to pay for the judicial review. It is possible that that situation will need to change but we are keenly aware of the commitment we made to you, our funders, to try and chase down Uber's VAT dodging and we do not seek to escape or avoid that commitment,

Jo Maugham QC

Our application for an order to cap our ‘adverse’ costs risk will be heard on the 5th, 6th or 7th of February. We have served further witness statement evidence which you can read here. We hope that this application will succeed so that we will then be able to make swift progress in the underlying litigation.

As you know, we are suing Uber in the High Court for the VAT invoice that would have exposed it as making taxable supplies, force it to charge VAT and pay (by our calculations) over £1bn in avoided VAT to HMRC.

The difficulty has always been on managing our costs liability. If Uber is on the hook for £1bn it will spend, spend, spend (very possibly millions) to try and protect itself.

To protect us from this risk of bearing that liability, we had to show we can’t get what we want by other means. And it is now clear following recent developments in other litigation that this is the best way forward.

We are currently pushing the High Court to set a hearing to fix our costs liability to be followed by a full hearing. We understand that you may be frustrated with the pace of progress - indeed so are we - but we continue to push for a speedy hearing and hope to update shortly.

In the meanwhile, we confirm that we continue to believe we have sufficient resources to get the issue decided. And, all of the money raised will be spent on external third party lawyers - not one penny has been spent on general Good Law Project expenditure and our founder continues to work entirely unpaid.

The contention that underlies my case against Uber – that it is it and not its drivers who are supplying transportation services – received a significant boost on Friday with the decision of the Employment Appeal Tribunal confirming that Uber is engaging workers and supplying transportation services. This is a powerful vindication of the decision to seek to do HMRC’s job and pursue Uber where it will not.

More difficult has been how, in practice, to advance a claim against Uber worth over £1bn in avoided VAT with a budget of a little over £100,000 in a setting where the loser is liable to the winner’s costs. My strategy to address this was two-fold.

First, I would sue Uber and ask the High Court to grant me a protective costs order so that, in the unlikely event I lost, I would not be personally bankrupted.

Second, I would seek to advance the claim in a setting where the loser is not liable to pay the winner’s costs. To this end, as I explained here, in a recent VAT return I claimed to be entitled to recover the VAT on the Uber taxi ride I took (the “Claim”). I anticipated that, if HMRC rejected the Claim, I could appeal against its rejection and my appeal would be heard in the specialist tax tribunal. Were I to lose I would not have to pay HMRC’s costs. And if I won it would be because a specialist tax tribunal had decided that Uber was charging VAT and – in such circumstances – HMRC would have no alternative but to act in the public interest and collect that VAT.

My application for a protective costs order was due to be heard on 13 November 2017. On 10 November 2017, and after some chasing, I finally received a meaningful response from HMRC to the Claim. That response is not a model of clarity but I believe – it is not possible to be certain – that it amounts to a rejection of the Claim and is a decision against which I can appeal to the tax tribunal.

A consequence of having an appealable decision in the tax tribunal is that the High Court would be unlikely to grant me a protective costs order. With that in mind, I agreed with Uber that my application for a protective costs order should be adjourned. If the tax tribunal disagrees that I have an appealable decision then I will, of course, pursue that application.

What does all of this mean? It means that I can, I believe, pursue without costs risk in the technical tax tribunal the contention that Uber is dodging VAT.

I will lodge an appeal against a rejection of the Claim to the tax tribunal in the coming week and push for the earliest possible hearing.

The claim we asked you to fund

The claim we asked you to fund is progressing.

Back in June, very shortly after we completed our fundraising, we filed our Statement of Claim in the High Court. That claim was drafted by a QC and a Junior. We also filed a request for costs protection: we continue to believe that we will win but, as we explained here, we also have to address the fact that, if we lose, we will face a costs liability that could exceed £1m. We have addressed that possibility by asking the court to grant us costs protection and our application – for which we have engaged a different, specialist costs, QC – will be heard in November. Obviously we cannot control when the High Court has capacity to hear applications of this nature.

Just in case the court refuses the application it would be helpful to have an alternative claimant in reserve. If you know someone who is VAT registered, not wealthy, and is prepared to be a claimant please let us know. We can guarantee that person suffers no financial loss.

A new claim against Uber

In the meantime, we are, with no further funding, pursuing the same claim in a different way.

The basis for the original claim against Uber – the one you funded – is that Uber charged VAT on the fare for a taxi ride taken by our director, Jo Maugham. The consequence of our claim succeeding is that it must have charged VAT on all other Uber taxi rides – and that it must pay that VAT to HMRC, a bill which could easily exceed £1bn.

We are now also pursuing a different claim.

In our director, Jo Maugham’s, VAT return for the quarter ending 30 June he sought to recover the £1.06 of VAT on that fare. As he explained here, if HMRC allows him to recover that £1.06, it will be accepting that he has paid £1.06 input tax to Uber and, implicitly, that it has to collect that £1.06 from Uber. And if that is true for his £1.06 it will also be so for every other £1.06 Uber has ever charged.

And if HMRC decides to refuse his claim he could have the chance to appeal to the First-tier Tribunal (Tax Chamber) against that rejection and contend that, contrary to HMRC's decision, he has paid input tax to Uber. And if he won that appeal the Tax Chamber would be deciding that Uber had charged VAT and, implicitly, that it must pay that VAT to HMRC - along with all the other VAT Uber has charged its passengers.

In that appeal, Jo Maugham would be the Appellant, HMRC would be the Respondent and Uber would be grumbling in the back of the room. And, unlike in the High Court, in the Tax Chamber the loser doesn’t have to pay the winners’ costs.

In August, HMRC replied to Mr Maugham’s VAT Return asking for more information and he wrote back in the following terms:

"I write further to my letter of 30 June 2017 and your reply of 7 August 2017.

"In your reply you say you are presently unable to exercise your discretion under regulation 29(2) Value Added Tax Regulations 1995 but invite me to submit further evidence.

"I attach for your information a letter before action to Uber London Limited (“Uber”) dated 21 March 2017 together with Uber’s reply dated 3 April 2017.

"You will note from the correspondence that:

• there is, and can be, no dispute about the fact of a supply of taxi services to me or the price I paid;
• there is, and can be, no dispute that if the supply were made by Uber (a taxable person) the price paid includes an amount of input tax (corresponding to the amount of output tax for which Uber would on that basis be obliged to account for to HMRC); and
• the reason why there is no VAT invoice recording VAT in the amount of £1.06 is simply that Uber denies that it has made a VATable supply: it says that it was its driver that made that supply.

"Given those facts (which are established by the evidence supplied with this letter and my letter of 30 June 2017) I can with respect see no basis for you to decline to exercise your discretion:

• if you agree with Uber that the supply is made by the driver then the appropriate course is for you to raise an assessment against me under section 73(1) Value Added Tax Act 1994; and
• if you agree with me that the supply is made by Uber then you ought to exercise your discretion to allow my claim for input tax.

"What would not be lawful would be for HMRC to leave this matter, and my tax liabilities, in limbo by declining to take, or unduly delaying, one or other of the above decisions.

"I await your further response."

We now wait to hear further from HMRC. When there is more news we will update you.

So that you can see what has been going on with the Uber case I have posted here (1) a copy of our letter to Uber’s solicitors (2) a copy of our pleadings (3) a copy of the ‘Response pack’ (4) our application for costs protection (5) my witness statement supporting that application and (6) the exhibit to that witness statement.

Perhaps the most useful document to read is the witness statement. But the key point to note is that – as our Director indicated in a piece in The Badge – before we ask the Court to set a window for a hearing of our claim, we have to address the possibility of a costs liability which might top £1m even before any appeals. We hope that the judge will see the public interest in our claim but if she or he does not we may look for an alternative claimant who doesn’t have any material assets. Do let us know at [email protected] if you are, or know, of such a person.

Thanks for your support,

Jo Maugham

So that you can see what has been going on with the Uber case I have posted here (1) a copy of our letter to Uber’s solicitors (2) a copy of our pleadings (3) a copy of the ‘Response pack’ (4) our application for costs protection (5) my witness statement supporting that application and (6) the exhibit to that witness statement.

Perhaps the most useful document to read is the witness statement. But the key point to note is that – as our Director indicated in a piece in The Badge – before we ask the Court to set a window for a hearing of our claim, we have to address the possibility of a costs liability which might top £1m even before any appeals. We hope that the judge will see the public interest in our claim but if she or he does not we may look for an alternative claimant who doesn’t have any material assets. Do let us know at [email protected] if you are, or know, of such a person.

Thanks for your support,

Jo Maugham

Earlier this week we issued proceedings against Uber London Limited.

Those who funded the action will have noticed that there was a delay between the funds being collected and proceedings being issued. This was to address the question of costs in more detail.

Uber have instructed Herbert Smith Freehills (“HSF”) to act for them in the proceedings and HSF have written several letters stating that Uber will look to recover its costs from Good Law Project Director, Jo Maugham, if they lose. 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.

We appreciate that many of those who funded this case want to see it move forward quickly. Legally, we are on strong ground. Indeed, following the decision of the Advocate General we are on even stronger ground than we appreciated when the litigation was crowdfunded. And that is the most important point. However, it would be foolish to underestimate Uber’s desire to hold on to what could very easily be £1bn of tax it has avoided and interest on that tax.

We will, of course, keep you updated as matters progress.

Thank you for your support. 

As you will have noticed we have now hit the initial fundraising target. This means we are in a position to commence proceedings against Uber. The legislation gives Uber a period of time to provide us with a VAT receipt - until the middle of this month - and this means we can't sue it until that period of time has run out. But we will not drag our heels. Last week - even before the fundraising target was hit - I asked the barrister team to start drafting the claim again Uber and I hope and expect we will be in a position to start proceedings against them in the High Court before the end of the month.

Some people have asked why the funding target has been raised. 

If you read the original listing it explains that it is very difficult to work out how much a case like this will cost and it points out that £75k is unlikely to be enough. I also said this on twitter a number of times whilst we were raising the £75k. And although £75k is a lot of money, remember, the case could well be worth billions of pounds to Uber. 

Because the barristers and solicitors are working at low rates, I think £75k will take us most but not all of the way. If we don't hit the raised target I am likely to need to seek more crowdfunding later on. But we will still take the initial steps. Indeed, I cannot absolutely rule out the possibility that we will need to raise more money even if we do hit the raised target. But I will try very hard to avoid that possibility.

Yes, I could have asked for more money to start with - but sometimes people like to see how you spend the money they've given you before they give you more. And if you ask for too high a target you run the risk that you won't hit it and you won't be able to do anything. So I exercised my judgment.

In the meantime, you should make sure that your MP understands your frustration at the fact that it is you who is having to pay to challenge Uber's tax avoidance. You should ask him or her why HMRC isn't doing it.

Thanks, again, for your support. I know the money you pledged was hard earned.

Jo Maugham