Uber settles VAT claim with HMRC and posts better-than-expected results | Uber

Uber is handing over £615m to UK tax authorities to settle an investigation into unpaid VAT, as it reported better-than-expected results, sending its shares higher.

The San Francisco-based food rental and delivery company said it reached a UK tax settlement on Monday to resolve all outstanding VAT claims and will pay £615m to HM Revenue and Customs in the fourth quarter.

Uber had previously argued that it was exempt from paying VAT because its drivers were classified as self-employed. After landmark court rulings that its drivers were entitled workers, it began adding VAT of 20% in March.

Jo Maugham, director of the Good Law Project, which took legal action against Uber in 2017 for tax evasion, tweeted about the tax settlement: “Quite a lot – but still less than I understood HMRC was asking… I wonder if Uber had already made payments on account?’

A spokesman for HMRC declined to comment on this but said: “HMRC has concluded a tax dispute with Uber in respect of UK VAT due. This is a good result for the UK taxpayer and one that we would reasonably expect to achieve in court, fully in line with our litigation and settlement strategy.

“HMRC never compromises its view of the law in order to secure a tax deal. We will not settle for any amount less than what we would reasonably expect to receive from litigation.”

The news came as Uber reported a 26% rise in gross bookings year-on-year to $29bn (£25.4bn) in the July to September quarter. Revenue beat forecasts with a 72% jump to $8.3 billion after the easing of the Covid lockdown led to a travel boom.

Uber’s share price jumped nearly 16% to $30.80 when Wall Street opened, valuing the company at $61 billion.

Dara Khosrowshahi, chief executive, said: “Even though the macroeconomic environment remains uncertain, Uber’s core business is stronger than ever.”

The mobility segment grew faster than the food delivery segment. Trips during the quarter rose 19% year over year to 1.95 billion, or about 21 million trips per day on average.

Uber posted a net loss of $1.2 billion, largely due to appreciations in its equity investments in other ride-hailing companies. But earnings rose to $516 million from $508 million on an adjusted Ebitda (earnings before interest, taxes, depreciation and amortization) basis.

It encouraged investors by forecasting adjusted Ebitda of $600 million to $630 million in the final quarter of 2022, above Wall Street forecasts, as well as revenue of $30 billion to $31 billion.

Uber also reported positive free cash flow, allaying concerns that it could run out of cash. It posted free cash flow of $358 million, up from $382 million in the second quarter.

In July, Uber files, a trove of documents leaked to the Guardian, revealed how the company had flouted laws, cheated police, exploited violence against drivers and secretly lobbied governments during its aggressive global expansion.

Uber is now seeking to reshape itself. Freight transport is a growing sector and recently launched a new advertising division to engage users at every stage, from in-app booking to car ride. Ads could bring in $1 billion a year by 2024.

Leave a Reply

Your email address will not be published. Required fields are marked *