Taxi firm loses €112,509 Vat battle with Revenue at Tax Appeals Commission

Over the 2018/19 period, the company did not charge Vat in respect of its supplies and the persons to whom the appellant provided its taxis were self-employed.

A transport firm that owns a 100-strong fleet of taxis has lost a €112,509 Vat battle with the Revenue Commissioners.

This follows the Tax Appeals Commission upholding a combined €112,509 Vat assessment issued to the firm by the Revenue Commissioners for the years 2018 and 2019.

Revenue issued the assessment in December 2022 after concluding the company was not, as it maintained, providing services constituting the provision of passenger transport, which is exempt from the charging of Vat.

The firm appealed the assessment in January 2023 and in its ruling at the end of a 42-page report, TAC commissioner Conor O’Higgins found the company was in fact providing a taxi rental service to drivers in order to carry out their activity and this was not exempt from Vat.

Over the 2018/19 period, the company did not charge Vat in respect of its supplies and the persons to whom the appellant provided its taxis were self-employed.

A director of the company, who was a taxi-driver for 20 years, described himself as an expert in the taxi industry, and gave evidence at the hearing on behalf of the firm, which was set up in 2016.

At the hearing, counsel for Revenue put it to the witness that the purpose of the business of the taxi firm was the leasing or renting out of taxis, and the witness did not agree.

He said the taxi firm was involved in "cosying", and asked what he meant by that, he replied: “Cosying is a joint venture between me and the driver. I supply the vehicle, I supply the meter, I supply the printer, I supply work, I supply everything.” 

Asked if he had any written evidence he had entered into a joint venture with taxi drivers, the director said: “Yes. The evidence is of a successful business. I have 100 taxis on the road, where I started out with two. So obviously the joint venture is working out quite well.” 

He said the cosy agreement was “a gentleman’s agreement”.

Counsel for the Revenue showed to the hearing an advert for the firm, which described the business as a “rental company. Our aim is to provide our drivers with quality rental vehicles and a professional, no-hassle service.”

In his findings, Mr O’Higgins noted there was little evidence on which to conclude the appellant was sharing in the income earned by the drivers of its vehicles.

He said the passengers transported in the appellant’s taxis would be issued a receipt by the person to whom the appellant had provided its tax and the receipt did not bear the appellant’s name. 

On the issue of cosying, Mr O’Higgins found the appellant was doing was supplying a taxi rental service to drivers who could not, or would struggle to, afford to purchase their own taxi.