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Lafferty v HMRC

In Lafferty v HMRC (TC03493 – 16 April 2014) the FTT held that fares paid by clients holding accounts with Lafferty and which were passed on to self-employed drivers were not subject to VAT.

Lafferty (trading as Castle Taxis) owned a fleet of cars equipped with radios which it hired out to independent taxi drivers. The cars did not bear the firm’s name and the drivers did not wear uniforms.

Customers who had accounts with Castle Taxis would request taxi services which Castle Taxis would then organise by finding a driver. These customers would be provided with a monthly invoice. Once this invoice was settled the relevant amount would be credited to the driver after offsetting the mileage payment due for the car. The drivers would therefore bear any bad debts.

The key issue was whether Castle Taxis acted as agents for the drivers or as...

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