Ride-hailing app Gett has been hit by an HMRC investigation into £5 million of business-to-business VAT receipts, according to documents filed at CompaniesHouse.
Gett is part-owned by Volkswagen, works with both private hire operators and London black cabs. According to Gett, the dispute centres around whether or not Gett is acting as an agent or not. Gett said HMRC “deems the group to be the principal rather than the agent”, meaning it must charge the full amount of VAT on its ride-hailing fees.
The claim only refers to its business customers, as Gett has previously said it already charges VAT on its consumer ride fares. Gett denies the claim, saying in its accounts that it “maintains its position as an agent and in line with agency rules has only been charging VAT on part of the ride, i.e. the profit the group makes”.
HMRC is also investigating Uber – which could cost the company up to £1 billion. Uber does not charge VAT on its rides as it says it acts as an “agent” – or middle man. If it is deemed to be the principal, it could face a massive bill for retrospective VAT, and would have to increase its fares and pass on the costs.
In December, the Government announced a review of how companies in the “sharing economy” charged and paid VAT.
Uber drivers are typically classed as self-employed, and they do not reach the £85,000 threshold for paying VAT. If Uber was classed as the entity supplying the service, the 20% tax would apply and potentially generate billions of pounds for the exchequer.