All Posts By

Martin Adams


UBER to Buy British Taxi Tech Firm Autocab

The watchdog for competition recently gave the green light for Uber’s takeover of taxi tech firm Autocab, giving the ride-hailing behemoth a crucial boost for its UK operations.

The UK media, mostly the Telegraph, published that the Competition & Markets Authority (CMA) launched an investigation at the beginning of the year to examine whether the deal would impact their rivals.

Uber gave a statement in August that it had finally reached an agreement to acquire the company, saying the purchase would aid in connecting passengers with local taxi drivers in areas it doesn’t serve at the moment.

The areas in question include: Oxford (which has an average of 68,000 app opens per month), Doncaster (24,500), Aberdeen (17,000) and Swansea (18,000).

As the deal formed, Uber agreed to keep Autocab as an independent business, with its own management and staff.

The probe found that there was only a small indirect competition between the 2 companies, with no evidence to suggest that Autocab could become a direct competitor to Uber in the future.

“Millions of people all across the UK use on taxis every day and technology has drastically transformed the way the industry works,” said Joe Bamford, senior mergers director at the CMA.

“It is therefore very important that company mergers like this one are properly inspected, down to every last detail, to ensure that customers aren’t negatively impacted.

“After a very thorough investigation, the CMA found no concerns with regards to competition, as a result of this deal going ahead.

“This is simply because these companies are not considered to be close competitors. The 2 businesses will each continue to face competition from their own rivals and Autocab’s existing customer taxi firms can choose to switch to alternative credible providers, should they wish.”

An Uber spokesperson stated: “We are absolutely delighted that the CMA has given their approval of our acquisition of Autocab.”

“We now look forward to working with the team at Autocab to help local smaller operators to grow and provide taxi drivers with real earning opportunities.”

The approval strikes a very much needed boost for Uber, after their UK business had been left reeling following the landmark Supreme Court ruling over how the taxi firm handles their workers.

Uber has now agreed to provide their drivers with holiday pay and a company pension after losing a long legal battle over how it classes their drivers as employees or self-employed.


Renting is an economic activity: But what About the Taxes?

The European Court of Justice recently ruled on the question of whether there is also a question of “active interference” when a holding company only rents a building to its subsidiaries, without also providing management services. The Court confirms that for there to be a question of “active interference”, there must be a permanent “economic activity”, carried out against payment and subject to VAT. The VAT directive also considers as an economic activity “any activity of producer, trader or provider of services and, in particular, the exploitation of a tangible or intangible good with a view to obtaining income from it having a permanent character.”

The current Vat Solutions for You

Based on the judgment of the European Court, the choice to charge VAT on the rental of real estate would therefore have the consequence that your holding company becomes “active” and can therefore recover the VAT paid. Since any exploitation of a tangible or intangible asset is considered an “economic activity”, the rental of real estate and the provision of intellectual property rights are in principle also sufficient to make your holding an active holding. As it results from the judgment that any activity subject to VAT can make a holding company active and as the management fees are subject to VAT, one could infer that it is sufficient to make your holding the (paid) administrator of the operating companies. However, this type of deduction must always be verified in practice, because administrative practice is often still based on older and more stringent views.

Preparatory acts

When preparing for an acquisition, you are generally faced with significant costs for various advice (due diligence, tax advice, legal advice, support for the acquisition, etc.). A large part of these costs must also be paid when the acquisition ultimately does not take place. To what extent can you recover the imputed VAT in this case?

According to the case law of the European Court of Justice, preparatory activities must already be attributed to economic activity. When a company intends, confirmed by objective evidence, to independently start an economic activity and already makes the first investment expenditure for this purpose, it must be considered as liable. It follows that a company which performs preparatory acts which are part of a project to acquire shares of another company with the intention of carrying on an economic activity consisting of interfering in the management of the latter by providing it with management services subject to VAT must be considered as subject. In such situations you can make use of the self employment tax calculator in all the options.

The acquisition does not take place?

The company can also recover the VAT if the envisaged activity has not seen the light of day and therefore has not given rise to taxable transactions. This is also the case when the taxable person was ultimately unable to use the goods or services which gave rise to the recovery of VAT due to circumstances beyond his control.


VAT is also recoverable when there is no direct and immediate link between a specific transaction and transactions carried out at a more or less later stage for which there is a right of deduction. In principle, it is sufficient that the costs are directly and immediately linked to the activity of the taxable person as a whole. Even when a planned acquisition does not take place, VAT on consultancy services is therefore in principle recoverable, if you can prove that you intended to actively interfere in the management of the target company and to provide in this framework of management services subject to VAT.