Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

VAT Taxable Person Manual

From
HM Revenue & Customs
Updated
, see all updates

Particular trades: taxi and hire cars: who is supplying the taxi transport? - how to decide

To answer this question, you will need firstly to use VTAXPER76800 to ensure that you have asked your trader all the relevant questions. Armed with this information, you will then need to follow the systematic approach illustrated in the taxi diagram. As the taxi diagram indicates, there are three questions to ask, in the following order:

  • are there any clear contractual differences between cash and account work?;
  • are the drivers employees of the cab firm?; and
  • to whom do the drivers supply their services, the cab firm or the customer?

The guidance at VTAXPER76900, VTAXPER77000 and VTAXPER77100 leads on from the above questions and is further supplemented by an aide-memoire at VTAXPER77100.

You may find it easier to follow the following tabular representation of the taxi diagram.

The taxi diagram in tabular form

Question 1 - Are there any clear contractual differences between cash and account work? Yes - Go to Question 2: consider cash and account work separately against the principles of VTAXPER76900.

No - Go to Question 2: consider all the firm’s activities against the principles of VTAXPER76900.

Unsure - Consider the guidance at VTAXPER76900 and return to Question 1.    
     
  Question 2 - Are the drivers employees of the cab firm? Yes - Cab firm is responsible for output tax on all takings.

No - Go to Question 3.

Unsure - Consider the guidance at VTAXPER77000 and return to Question 2.    
  Question 3 - To whom do the drivers supply their services? To the cab firm who then make an onward supply to the customer - Cab firm is responsible for output tax on all takings.

Direct to the customer - Cab firm accounts for output tax only on the monies it retains, such as fees received for radio hire or other services. Monies retained by the drivers are only taxable if drivers are registered or registrable. Any invoices issued by the cab firm for account work are incorrect. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Unsure - Consider the guidance at VTAXPER77100 and return to Question 3.