Earlier this week Uber London Ltd filed its full accounts up until December 2018 at Companies House.
The big news wasn’t that the division made a relatively meagre profit of £5.1m. (The profit is hardly indicative of anything due to the group’s structural complexity.)
It was Note 13 which recounted the following about Uber London’s contingent liabilities:
The most newsworthy part was arguably this one: “the Uber Group is involved in an ongoing dialog with HMRC, which is seeking to classify the Uber Group as a transportation provider. Being classified as a transportation provider would result in a VAT (20%) on Gross Bookings or on the service fee that the Company charges Drivers, both retroactively and prospectively.”
Uber London’s accounts do not provide any indication of the total sum being recorded as a contingent liability at Uber London’s parent, the Uber Group.
But various sources tell us the bill could be as large as £1bn, or more. These are not small sums.
This is a big deal because the threshold for UK businesses having to pay VAT at the time was a turnover of more than £81K (it’s now £85k).
Since Uber drivers mostly earn much less than that, most do not incur VAT liabilities. If Uber is deemed an employer, however, those revenues would then be deemed Uber’s rather than drivers’ — more than surpassing the VAT threshold and thus exposing the company to potentially huge VAT liabilities from then on.
So, in addition to cheating their drivers, they have been using their “Gig Economy” structure to evade taxes, and now it’s coming back to bite them in the butt. Quelle surprise.
In related news,
another scheme to cheat their drivers Uber’s auto insurance division has lost one of its underwriters, probably either because of the gypsy cab firm’s increasingly toxic public image, or because their risk reduction protocols, which would involve things like driver background checks, are woefully inadequate.
In either case, James River Group is claiming, “Pre-tax, adverse development of between $55 and $60 million,” which was enough for them to dump their largest customer and tank their own stock:
PEMBROKE, Bermuda, Oct. 08, 2019 (GLOBE NEWSWIRE) — James River Group Holdings, Ltd. (the “Company”) (NASDAQ: “JRVR”) today announced that it delivered a notice of early cancellation, effective December 31, 2019, of all insurance policies issued to its largest customer, Rasier LLC and its affiliates. All insurance policies related to this customer are included in the Company’s commercial auto line of business within its Excess and Surplus Lines segment, and a majority of the insurance policies were due to expire on February 29, 2020.
“This account has not met our expectations for profitability, and we think it best to terminate the underwriting relationship as of year end,” said J. Adam Abram, Chairman and Chief Executive Officer of James River.
Uber doesn’t just f%$# its drivers, it f%$#s its suppliers as well.
H/t naked capitalism.