Lawyer Who Won a Brexit Case Targets Uber Over $260 Million a Year in Taxes

(Bloomberg) -- The lawyer who spearheaded a landmark court case -- which ended with the European Union’s top court ruling that the U.K. can unilaterally reverse Brexit -- appeared in court Wednesday for a fresh battle, this time with Uber Technologies Inc.

Jolyon Maugham, who runs a group that raises money for lawsuits that promote a progressive agenda, says Uber should pay Value Added Tax, a 20 percent U.K. sales tax on most goods and services. Uber says it doesn’t need to because it’s only acting as an intermediary between drivers and riders.

Uber would owe 1 billion pounds ($1.3 billion) if Maugham won his case, once backdated payments are counted, Maugham said outside court, citing his own calculations.

His lawyer Vikram Sachdeva said at the court hearing that the case could leave Uber liable for an estimated annual tax bill of 200 million pounds.

The case centers on an Uber journey Maugham took in March 2017, which cost 6 pounds and 34 pence. He wants a court declaration that Uber should give him a VAT invoice for 1 pound and 6 pence for the journey. The invoice would allow him to reclaim the sales tax as the trip was for business purposes.

“The sum at issue is obviously trivial,” Maugham said in court filings, but the underlying case is “of great public importance” because of the amount of tax that would ultimately be payable if he wins.

The case will turn on the question of whether Uber should be classed as the supplier of cab rides, or whether its drivers should be. It’s a question at the heart of the so-called “gig economy,” where technology companies have upended traditional employment models.

“Anyone who gets in an Uber is affected by this case,” Sachdeva said in court on Wednesday.

Black Cabs

Maugham’s lawsuit “is largely crowdfunded by the black cab taxi industry, who have a significant commercial interest in seeking to alter the competitiveness” of Uber’s services, the ride-hailing firm said in its court filings.
Sachdeva said Maugham is motivated by “good governance” and “wants people who ought to pay their VAT to pay it.” Maugham is “expressly saying he’s not doing it for the purpose of the black cab industry,” Sachdeva said.

An Uber spokeswoman didn’t immediately comment.

Maugham is one of the most outspoken voices against the U.K.’s looming exit from the European Union. In 2016, he ran a crowdfunding campaign for a legal challenge over Prime Minister Theresa May’s plan to start the formal process for Brexit, an Article 50 notice, without first holding a vote in Parliament. That campaign became the People’s Challenge, one of the groups supporting Gina Miller in a case that went all the way to the Supreme Court -- and won.

Uber says Maugham’s latest case has no merit and there’s “no need for this claim to be brought.” Uber argues that HM Revenue & Customs, the U.K. tax authority, is the appropriate agency to decide on its tax payments, not Maugham.

At a hearing Wednesday, Maugham applied for an order that, if he ends up losing the case, the most he’ll have to pay Uber is 20,000 pounds in legal fees. Maugham’s resources “pale in comparison” to Uber, and he won’t be able to continue with the case if he doesn’t get the limit, he said in filings.

Uber says Maugham could continue the lawsuit without the costs order because he could raise more money from black cab drivers and others.

The ride-hailing giant is also embroiled in a separate British court battle over the employment rights of its drivers. It’s taking an appeal to the country’s top court over whether drivers are entitled to the minimum wage and holiday pay.

The case is Jolyon Toby Dennis Maugham v Uber London Limited, High Court of Justice, Case No. HC-2017-001496.

To contact the reporter on this story: Kaye Wiggins in London at kwiggins4@bloomberg.net

To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Christopher Elser

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