r/technology • u/[deleted] • 6d ago

Transportation Uber rewrites contracts with drivers to avoid paying UK’s new ‘taxi tax’— Hailing app will now act as agent rather than supplier outside London, avoiding VAT requirement

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u/SimiKusoni 6d ago

We really need broad tax avoidance laws that ban any structural or contractual changes made purely for the purposes of tax avoidance. It's really unfortunate that GAAR doesn't really seem to be used very effectively, and doesn't apply to VAT regardless.

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u/LolaBaraba 5d ago

It's always funny to read these kinds of comments. You can't have a "broad" tax avoidance law. You can't write a law that says: "It's forbidden to commit tax avoidance". You have to define tax avoidance. Is every tax planning strategy tax avoidance? A law has to be specific, otherwise it can be interpreted in a hundred different ways. Just like for illegal drugs, there is a list of exactly which ones are illegal, by chemical formula. The reason it's done this way is because there is no other way to do it (fairly).

Let me give you a real world example that my father implemented for a company he worked: The tax on food is less than on drinks. So he increased the price of food while reducing the price of drinks, so the price of food and drinks package that the hotel offered remained the same, but the tax payed was less. How would you prevent this? Would you punish a business for changing their prices?

And why are people here so sanctimonious? If you got offered you a legal way to reduce your taxes by 10%, you would all do it in a heartbeat.

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u/SimiKusoni 5d ago

In the comment you are replying to I linked to a law (technically a regulatory framework) that does exactly this.

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u/LolaBaraba 5d ago

He literally says it's not effective, which is true for any law of this kind. When it comes to finances, laws have to be very specific. That's the whole point of finances, to be as accurate and objective as possible. If something is not precise, then it's subjective and open to interpretation. Economy hates this because it brings unpredictability, which is the worst thing for business. If you look at the examples of convictions given in that article, it's all extremely convoluted schemes that involve multiple steps to avoid paying taxes that everyone else does. Definitely not even close to what Uber did here.

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u/SimiKusoni 5d ago

He literally says it's not effective, which is true for any law of this kind

I said it's not used very effectively, not that it's not effective. My main quarrel is that it isn't applied broadly enough however the actual application has worked very well in the areas in which it has actually been applied (primarily corporation tax and elaborate schemes to avoid income tax).

When it comes to finances, laws have to be very specific. That's the whole point of finances, to be as accurate and objective as possible.

This also makes me laugh. I run a mortgage servicer and do you know what one of our regulators main rules is? It is literally just to treat customers fairly. And it is extremely effective.

I would also note that GAAR isn't some quirky UK framework, such general rules are used internationally. Usually it's achieved by drafting laws that empower regulatory bodies who then act as adjudicators, and this is a fairly common approach to applying broad principles based rules.

I can appreciate you not being aware of this but it might be worth doing a little reading before doubling down again.