A transport firm that owns a 100-strong fleet of taxis has lost a €112,509 VAT battle with the Revenue Commissioners.
The Tax Appeals Commission (TAC) has upheld 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 that the company was not, as it had maintained, providing services constituting the provision of passenger transport which is exempt from the charging of VAT.
TAC commissioner, Conor O’Higgins, found that the company was in fact providing a taxi rental service to drivers and this was not exempt from VAT.
RM Block
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.
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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 that 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 that he had entered into a joint venture with taxi drivers, the director stated: “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 that 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”.
A second witness for the tax company stated that the company was the owner of the largest single fleet of Wheelchair Accessible Vehicles (WAV) taxis in the country.
In his findings, Mr O’Higgins noted that there was little evidence on which to conclude that the appellant was sharing in the income earned by the drivers of its vehicles.
On the issue of cosying, Mr O’Higgins found that what 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.
