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Friday, 6 October 2017

Uber London Fantasy Accounting

As driver and rider matching service Uber steps up its attempt to persuade Transport for London to allow it back into the Private Hire tent from which it was recently so unceremoniously expelled, its local company Uber London Ltd - the one that holds the operator’s licence - has made its accounts available. These have caused some interest from those in the taxi trade. It is not difficult to see why.
While the Evening Standard has, as befits a media outlet drinking the Uber Kool-Aid and not bothering to look beneath the surface, told readersUber accounts reveal how firm's revenues soared in London from £23.3m to £36.9m last year … Sales increased by 59 per cent from £23.3 million to £36.9 million, whole pre-tax profits were up almost two thirds from £1.8 million to just over £3 million … The 2016 accounts for Uber London Ltd also show that its tax bill rose from £410,851 to £551,174”.

The adulatory tone continues. “Uber has more than 40,000 drivers in London and is used by 3.5 million passengers at least once every 90 days … The accounts also show that the number of workers directly employed by Uber in London almost doubled last year to 199”. As Sir Sean nearly said, I think we got the point.

What the Standard has not picked up on, but taxi trade news source Taxi Point has, is that these numbers don’t compute. If Uber takes 20% from the amount paid by each punter, that means the total income - adding the 80% retained by drivers to the 20% represented by £36.9 million - is around £184.5 million, of which £147.6 million is divvied up between 40,000 drivers. That is a measly £3,690 per driver.

And the amount of Corporation Tax paid works out at less than £14 per driver. As Taxi Point observes, a driver taking in (for instance) £35,000 a year will most likely be having to pay out £20,000 of that for the car, insurance, fuel and other costs. So they end up with no more than £15,000 to call their own. That is hardly going to pay much more than the rent in the pokiest and cheapest bedsit, given London’s prices. £3,690? You’re having a laugh.
Moreover, we are constantly assailed with stories of how Uber drivers make enough to pay (for instance) for their children to go to University, for holidays they would not otherwise be able to take, or to buy all those extras, nights out, weekend trips, birthday and Christmas presents. So why the disconnect between the numbers and the propaganda?

Ah well. This is down to two factors. One, not all those 40,000 drivers are active in the Private Hire market at any one time. And two, as the Corporation Tax figure hints, we are not seeing the true scale of Uber’s London income. Most of that appears to be channelled via a company called Uber BV, which is registered in The Netherlands.

So when the Standard tells readers “the accounts show that London accounts for just a small proportion of Uber’s global operations”, what it really means is that Uber London’s accounts account for just a small proportion of Uber’s London operations.

Uber’s cheerleaders, like the Standard, are therefore openly backing tax avoidance. Perhaps they could explain that to all those Londoners for whom that is not an option.


Nick63 said...

One wonders what a recent former Chancellor of the Exchequer would have to say about tax avoidance on this (or any) scale.

There never seems to be one around when you need one.

Anonymous said...

To Nick63.

I wouldn't count on Hammond the Hissing Lizard being any better......