Taxi drivers have called on the government to address “unfair” tax practices used by mini-cab provider Uber, and threatened to put in place similar arrangements unless action is taken. Uber is an app-based transportation and taxi company, headquartered in San Francisco.

Uber has attracted much controversy already, the app in which customers hail their drivers acts, in effect, as a meter, is, it has been suggested by traditional taxi drivers, with many suggesting that Uber’s business model should be modified if it is to be used outside of the UK. Its tax arrangements have also drawn ire as its design requires customers to use its app operated by a Dutch entity, in turn seeing it pay Dutch tax instead of the UK’s.

In a letter sent to HM Revenue & Customs, chairman of the LPHCA (Licensed Private Hire Car Association) Steve Wright said Uber gained an “unfair competitive advantage” by diverting payments through the Dutch subsidiary.

The LPHCA represents over 20,000 licensed drivers who work for 200 firms from across the country. Its challenge allies it with London’s black cab drivers, who have protested against the decision by Transport for London to allow the California-based start-up to operate within the capital, a ruling which has been referred to the High Court.

Wright claimed Uber “appears to have structured its [London] operation with the sole purpose of avoiding the application of VAT in the UK at the prevailing rate”.

“This is despite being a UK-registered company and a Licensed London Private Hire Operator, promoting its services in the UK and carrying out journeys in the UK for UK credit and debit cardholders.”

Steve Wright then later called on HMRC to scrutinize the current arrangement of Uber, especially given the changes to VAT legislation that see charges on digital services within the EU are enforced dependent on the location.

Wright added that should Uber’s arrangement be found to be legitimate, the LPHCA would “reluctantly recommend to our members that they adopt the same VAT as Uber London Ltd”.

“This will of course represent a further significant loss to HM Treasury but we cannot continue to stand by and watch our members being disadvantaged by unfair competition,” he explained.

Uber responded to these allegations in a recent statement:”Uber complies with all applicable tax laws … As such we are fully compliant with the tax laws of the United Kingdom and the European Union.”