Uber settles VAT claim with HMRC and posts better than expected results

Uber is handing £615m to UK tax authorities to settle an investigation into unpaid VAT, as it reported better than expected results, sending its shares higher.

The San Francisco-based ride hire and food delivery company said it achieved a UK tax settlement on Monday to resolve all outstanding VAT claims and would pay £615m to HM Revenue and Customs during the fourth quarter.

Uber had previously argued it was exempt from paying VAT because its drivers were classified as self-employed. Following landmark court rulings that its drivers were workers with rights, it started adding 20% VAT in March.

The news came as Uber reported a 26% rise in gross bookings year on year, to $29bn (£25.4bn) in the quarter from July to September. Revenues beat forecasts with a 72% leap to $8.3bn after Covid lockdowns eased, leading to booming travel.

The Uber share price jumped nearly 16% to $30.80 when Wall Street opened, valuing the company at $61bn.

The mobility division grew faster than the food delivery arm. Trips during the quarter grew 19% year on year to 1.95bn, or about 21m trips a day on average.

Uber made a net loss of $1.2bn, mainly because of revaluations of its equity investments in other ride-hailing companies. But profits increased to $516m from $508m on an adjusted Ebitda basis (earnings before interest, tax, depreciation and amortisation).

It cheered investors by forecasting adjusted Ebitda of $600m to $630m in the final quarter of 2022, above Wall Street forecasts, as well as revenues of $30bn to $31bn.

Uber also reported positive free cash flow, easing worries that it might run out of cash. It recorded free cash flow of $358m, on top of $382m in the second quarter.

In July, the Uber files, a cache of documents leaked to the Guardian, exposed how the company had flouted laws, duped police, exploited violence against drivers and secretly lobbied governments during its aggressive global expansion.

Uber is now seeking to remodel itself. Freight is a growing area, and it has recently launched a new advertising division to capture users at every stage, from booking on the app to the car ride. The ads could generate $1bn a year from 2024.