Addison Lee slaps 20% on top of prebooked fares (!)

[George K]

Absolutely ludicrous email from AddLee, which just removed the only reason to use them (for me). It already had inflated prices and lack of driver availability. It’s now completely out of touch for me, even with Amex’s £10 credit, which was the only reason I stuck with them.

“We wanted to let you know that we are updating our user Terms & Conditions, due to changes in the way the Private Hire industry is regulated in London. This will, unfortunately, impact the total cost of your upcoming pre-booked journey(s) with Addison Lee.

Following guidance from the High Court and Transport for London (TfL), all PHV operators in London must now contract directly with passengers using their services as principal. Currently, Addison Lee acts as an agent on retail journeys, with the driver as principal, which means these fares are exempt from VAT.

While there is no timeline for the implementation of these changes, as a responsible business, we will implement them on Saturday 26 March 2022.

All bookings for our car services from this time will therefore have 20% VAT added to the previously VAT exempt fares to comply with the new guidance.”

• This topic was modified 54 years, 11 months ago by .

[meta]

Yes, all the pre-booked service providers will eventually do the same. I guess it’s back to local companies who are often cheaper, but they too are sometimes struggling or are charging more at peak holiday times.

• This reply was modified 54 years, 11 months ago by .

[memesweeper]

Sad to hear your fare is going up, but there is a good reason for this.

Conventional cab firms just put you in touch with a driver, who charges you. Provided the driver doesn’t exceed the VAT threshold, there’s not VAT to pay. The driver pays the cab firm a fee (typically a radio rental) which is VATable.

New style apps like Uber you pay the app operator, who skim a percentage, and then pay the driver what’s left. They have huge turnovers and are undoubtedly inscope for VAT and should be charging it. They engaged in a “legal fiction” where they pretended the customer was dealing directly with the driver, which was obviously nonesense. I’m glad the loophole is closed, even if I end up paying more for my journeys as a result.

[Lady London]

Isn’t this also about drivers being employed and not self-employed and therefore having employee rights and benefits?

[Andrew J]

Yep, moves the Amex Platinum £10 credit from quite useless to completely useless. AL will have to respond by reducing their prices by 20% if they want to survive.

[meta]

memesweeper wrote:

Sad to hear your fare is going up, but there is a good reason for this.

Conventional cab firms just put you in touch with a driver, who charges you. Provided the driver doesn’t exceed the VAT threshold, there’s not VAT to pay. The driver pays the cab firm a fee (typically a radio rental) which is VATable.

New style apps like Uber you pay the app operator, who skim a percentage, and then pay the driver what’s left. They have huge turnovers and are undoubtedly inscope for VAT and should be charging it. They engaged in a “legal fiction” where they pretended the customer was dealing directly with the driver, which was obviously nonesense. I’m glad the loophole is closed, even if I end up paying more for my journeys as a result.

My local cab company doesn’t put me in touch with the driver. I don’t know who will drive me until they come. They also have an app and the payment is
processed through it. It’s just that their drivers are all employees on a fixed salary. They still manage to quote the same as Add Lee and won’t be increasing their prices.

@LadyLondon it’s exactly that

[Rob]

In that case, they will have to start adding VAT.

[meta]

They don’t have to actually as Add Lee email points out, the court ruling does not set a deadline for implementation.

« While there is no timeline for the implementation of these changes… »

• This reply was modified 54 years, 11 months ago by .

[Rob]

It’s coming though, clearly. HMRC just needs time to deal with the court ruling.

[TJ]

Not sure why AL took the decision to implement the change now given that there is currently no implementation deadline. It could take some time before a deadline is imposed, by which time AL will have lost a significant amount of business. Perhaps not quite commercial suicide, but a poor business decision all the same I feel.

[Jay-Marc]

Uber applied a 20% rise nationwide on rates earlier this month even though the legal case only directly related to London. They are facing up to a back assessment for VAT reported to be of the order of £1.5 bn.