Uber –v– Delta: Aaron & Partners heads to the Supreme Court

Layla Barke-Jones, one of our Dispute Resolution Partners, will be leading a team of lawyers representing Delta Taxis in the final round of a historic legal battle.

In this article, we take a closer look at the case, its background and what this could mean for the future of the private hire industry. 

The case: Uber Britannia Limited –v– Delta Merseyside Limited & Anor

Two private hire firms – Delta and Veezu – are currently preparing to take on an industry giant. Uber wants to see its own contractual model implemented nationwide; if the Supreme Court rules in its favour, all private hire firms would need to adopt that model and, as a result, charge VAT on taxi fares.

We’ve been here before...

The hearing, which is due to take place in July, is the latest in a long-running legal dispute between Delta and Uber. In fact, it will be the third time that the two companies have come to blows over the interpretation of licensing legislation. 

It all started back in 2021, after a court ruling reclassified Uber’s drivers as ‘workers’. Lord Justice Leggatt, the leading judge, commented that a particular contractual model was required under the legislation governing London. A case was promptly brought in the capital, with Uber and Transport for London amongst the parties seeking to clarify the implications of the statement. 

It’s important to note here that the VAT treatment of private hire companies is dependent on their business model: those acting as agents for their self-employed drivers are not required to charge VAT. The industry has adopted a range of business models, including scenarios where drivers provide the services to the passenger and models where the private hire firm provides the services directly to passengers – HMRC carefully considers this context when assessing whether VAT applies. 

Faced with the prospect of having to change its business model, Uber challenged the 2021 decision – and lost. The tech leader then decided to pursue legal action against Merseyside’s Sefton Council, seeking to extend the ruling to all taxi operators outside London. Delta was one of four interveners rallying against a judgement in Uber’s favour and representing the views of traditional private hire firms and their passengers. 

The judge, handing down her decision in 2023, sided with Uber – meaning all private hire operators outside London would be required to adopt a single business model. 

The government of the day clarified that this would lead to all private hire fares being subject to VAT, therefore removing the choice of model and VAT implications that had previously existed. It also launched a consultation on how to legislate for the effect of the ruling, with particular consideration given to the impact on some of the most vulnerable members of society – especially those who are reliant on taxi journeys for essential travel. 

But this was not the end of the story; Delta Taxis, along with Veezu, successfully challenged the verdict in a landmark Court of Appeal case last summer. 

Uber has since launched an appeal of its own, seeking to plead its case once again – this time, in front of the highest court in the land. 

But what does this mean? What happens if Uber succeeds? 

Putting it simply, victory for Uber would require all private hire firms to collect VAT. For those that don’t currently charge VAT, this would see their taxi fares increase by at least 20%.

Maintaining the status quo is firmly in the public interest; the alternative would have devastating consequences for local taxi businesses, drivers and users alike. 

a) impact on private hire taxi businesses 

A decision in Uber’s favour would be a monumental blow to small private hire firms up and down the country. Changing business model may not be feasible for these operators, who do not have the resources to compete and likely would not survive the move. 

Most local firms – especially those currently taking telephone bookings and accepting cash fares – cannot afford the additional costs attached to converting to a model where they can collect VAT from passengers. These small businesses will inevitably be priced out of the market. 

b) impact on drivers 

Drivers will, as ever, be at the coalface. In business models where the driver collects the fare, they will now also need to collect the VAT to pass to the firm. Drivers working for traditional private hire companies will see an increase in their responsibilities as well as a drop in demand: increased prices will mean fewer passengers, which will in turn push drivers out of the industry. 

c) impact on customers 

We have already mentioned the financial impact for customers of traditional private hire firms – prices going up – but what about the wider consequences? What happens when taxi journeys become unaffordable? 

Take, for example, the impact on accessibility. The daily lives of vulnerable users, such as passengers with mobility issues, will be drastically affected. Due to cost increases, these passengers won't be able to make their essential journeys – to work, school or the hospital. The same can be said for anyone living in areas with limited public transport. 

The real impact will be on the customers: the millions of people who use and rely on private hire vehicles every single day.  

The CrowdJustice campaign 

Delta and Veezu have recently launched a CrowdJustice campaign – they want to raise £500,000 to act as a ‘fighting fund’ ahead of their upcoming legal clash.

This fundraising drive is an attempt to raise awareness and funds, with the taxi industry coming together to protest against increased fares and support the companies seeking to block Uber’s move. 

Help Delta and Veezu protect passengers, drivers and the future of the private hire industry. 

Read more and donate here: Say NO to VAT on taxi fares!