Uber and other taxi apps in the UK will have to increase prices after a legal ruling that all private hire taxi operators must make contracts with their customers.
The High Court in London rejected the claim from Uber Technologies Inc (NYSE:UBER) that it acts as a booking ‘agent’ for drivers and said all rideshare services must take legal responsibility for cab journeys booked via their platforms.
While Uber had argued that there was a difference between accepting a booking and actually transporting a passenger, the High Court said the distinction was “illusory”.
This follows a High Court ruling earlier this year that Uber drivers should be treated as workers not contractors, and that this meant that it was Uber that had to enter a contract with each passenger rather than this being between the driver and their passengers.
Because Uber is VAT registered, unlike most of its drivers, it is now likely to have to charge VAT on all of its rides.
GMB, the trade union for drivers, said this would affect private hire firms across London, from Uber app rival Bolt and taxi firm Addison Lee, as existing advice from Transport for London, which regulates private hire operators in London, would need to be updated.
"It means TfL’s guidance is now incorrect and it means most operators are acting illegally and must get their house in order.
“GMB urges private hire operators such as Bolt and Addison Lee – who still refuse to give drivers the rights to which they are legally entitled – to change their business models in light of today’s judgment.”
A spokesperson for TfL said: “All operators will need to carefully consider the court's judgment and take steps to ensure that they comply with it, including considering whether any changes to their way of working are required.”
While the case referred only to rules in London, Uber and the App Drivers and Couriers Union, which was a defendant in the case, were both reported as expecting the ruling to be followed by licensing authorities across the UK.
After March’s ruling that drivers were in fact employees and not independent contractors, Uber announced last month that fares would be raised by at least 10%, going as high to 25% to and from London’s major airports during peak hours because of the increased costs.