Question to the Department for Transport:

To ask the Secretary of State for Transport, whether a taxi operator licensed under the Local Government (Miscellaneous Provisions) Act 1976 is required to enter into a contractual obligation with the passenger, and is therefore liable for paying VAT.

Interpretation of the law is ultimately a matter for the courts. In reaching its declaration on the legislation that applies to private hire vehicle operators in London, the High Court considered that which applies in the rest of England (except Plymouth) and Wales, but it did not make a declaration on the Local Government (Miscellaneous Provisions) Act 1976.

The recent High Court case was not a tax case, and so therefore does not have a direct bearing on the tax position. However, VAT is a tax that applies to transactions and is intended to tax what actually happens. Therefore, where a private hire vehicle operator supplies transport services to the passenger it should account for VAT on its fares accordingly.