A millionaire barrister who raised crowdfunding money to fight ride-sharing company Uber in court over a £1.06 VAT receipt has lost attempts to limit his court costs liability and could face a £1 Million legal bill.
The initial reason given for tax lawyer Jolyon Maugham QC bringing the case against Uber was that he was not given a VAT receipt for £1.06 for his £6.34 taxi journey which he could have reclaimed from HMRC as a business expense and that Mr Maugham QC believed that Uber was undercharging VAT on its taxi services.
However, as commentators have noted there may be a wider angle to this story as the barrister accepted that the VAT receipt amount that he sought was trivial and that it may be more about establishing whether Uber as a company is subject to VAT. If Uber is found to be subject to VAT, Mr Maugham QC’s action could trigger a £1bn VAT bill against Uber.
More Than Half Raised From The Black Cab Trade
Even though Mr Maugham QC managed to raise £107,650 to bring the case, one of the factors that appears to have influenced Mr Justice Trower’s rejection of Mr Maugham QC’s attempt to shield himself from the £1M legal bill and his attempt to appeal against the rejection is the proportion of money raised from the black cab trade to fight Uber. For example, the judge pointed out that “well in excess of 50%” of the crowdfunding money came from the black cab trade, and this included a donation of £20,000 from just one unidentified black cab source.
Income A Factor
Even though Mr Maugham QC wanted to limit his legal costs liability to £20,000 in the High Court case he brought against Uber, some commentators have noted that Mr Maugham QC’s alleged net annual income of £400,000, and his ownership of two properties may also have been a factor in the judge deciding not to stop Uber from recovering its estimated £1 million legal costs if it wins the main case.
The VAT Argument
This case was originally intended to focus on VAT, and one thing it has done is to shine a light on an argument about whether it is the individual Uber drivers who need to be VAT registered to give a VAT receipt, or whether Uber now has a large VAT liability.
What Does This Mean For Your Business?
The case was originally based on an assertion that Uber may be undercharging VAT on the taxi services it offers, and that HMRC may be treating big US multinationals such as Uber with kid gloves and an allegation that Uber could be thought by some to have a business model that’s designed to minimise its tax liability, and to minimise the workers’ rights that it has to offer to its drivers.
According Jolyon Maugham QC, in his statement via the Good Law Project, the decision to reject his attempt to limit his liability for legal costs could be seen as an example of how corporations can use the threat of costs liability to somehow dodge legal accountability, thereby making it difficult for other individuals or organisations to hold them to account.
Although Mr Maugham QC’s personal income and property assets may have had a bearing on the Judge’s decision not to grant him protection from an estimated £1 million legal bill if Uber wins, the outcome could also send a warning to businesses that taking on a big company/corporation in court could be make or break and could have serious financial implications.