One of my client (Cab driver) received email from UBER (a cab service company) asking him to get VAT registered. His income was only £56,000 approx but as UBER deducts commission of some percentage so if we gross it up, it comes to approx. £71k and he would still be under the threshold of VAT registration(i.e. £82,000) in UK. But UBER is asking him to be registered for VAT as his threshold has reached due to some reverse charge rules. Remember UBER is paying to its drivers via its Dutch subsidiary UBER BV. What is the threshold for reverse charge?
My client is providing service through its company registered in UK. What rules will be applicable as my client is providing services to a Dutch Subsiadiary and getting paid by that Subsidiary. Remember, services (Cab services) are provided within in the UK so will the place of supply be an issue?
Any help would be appreciated.
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Replies (6)
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Here's how it works:
Your client provides £71K of taxis services to UK individuals in the UK. Your client is not providing anything to Uber.
Uber (based in the Netherlands) supply your client with £15K of services of providing him with custom.
As your client is a business, Uber's supply is a B2B general rule supply, meaning that Uber can zero-rate their supply in the Netherlands, but your client is treated as having supplied Uber's services to himself.
So your client's taxable turnover is the £71K of services to his passengers and the £15K of Uber's services that he is deemed to have supplied to himself.
Guess what!? His taxable turnover is £86K
Thank you but
Thank you for your reply but why are we including another £15K of Uber's supply into my clients turnover. We already grossed up £56K TO 71£k by adding Uber's commisison.
Fewer
Agree with that analysis.
Your driver probably needs to work fewer hours and claim to HMRC that this was a temporary breach of the threshold.
good income
I didn't realise an Uber driver could make that much. I guess fuel eats into it significantly, though.
For the benefit of the hard of understanding, the actual taxable turnover is £76K and there is deemed turnover of £15K (in order that Uber's £15K supply is chargeable to UK VAT, which is then recoverable as input VAT in the UK).