The crux of the recently highly publicised Uber case is the question of who is supplying the end client.
Uber argued it was the drivers supplying the end client: Client buys service (transport) from driver; driver buys service from Uber (logistics). (Uber just an agent)
The Employment Tribunal found that it was Uber supplying the end client: Client buys service (transport) from Uber; Uber buys service (car and driving) from driver. (Uber is the principle).
In Uber’s version of the world, they would only declare VAT on their profit on the deal not the drivers share. Also there is no employers national insurance at all.
If the ET is right (and of course there will be appeals on this) then Uber must declare VAT on the whole amount paid by the client. And there will be employers national insurance on the amounts paid to the drivers.
Are you, or a business you work with, in this situation? It’s a common scenario in many industries. A central company (often owning a property, but not always) offers services to the public “via their self employed people”. Hey presto. No VAT on the sales to the pubic because the self employed people operate under the VAT threshold. And no Employers national insurance at all.
This can work. It can be a true construction of the facts that the services are supplied by the self employed individuals (drivers in Ubers case) not the central company. But as Uber and the ET have shown, it can be a false conculsion and a dangerous situation.
As with all of our tax tips and web pages this information is necessarily summarised and of a general nature. If you would like detailed specific advice please contact us.