Great piece, thank you for sharing! One note about legal contingencies. Although Uber adjusted its operations subsequent to UK ruling, Uber has a dispute with UK tax authorities regarding the application of VAT.
Based om the 10-Q disclosure: "As of March 14, 2022, we modified our operating model in the UK, such that as of that date Uber UK is a merchant of transportation and is required to remit VAT. Uber UK is remitting VAT under the Value Added (Tour Operators) Order 1987 (“VAT Order 1987”), which allows for VAT remittance on a calculated margin, rather than on Gross Bookings. We have received multiple assessments from the HMRC disputing our application of VAT Order 1987 for the period of March 2022 to March 2024, totaling approximately $1.4 billion (£1.1 billion) for unpaid VAT."
Uber did not record a contingency for this dispute. Moreover, in order to appeal Uber had to pay the assessment and recorded this payment as other receivable. If Uber loses the appeal, they will have to reverse the receivable and record the loss through the P&L. Francine McKenna and I wrote about this:
Great piece, thank you for sharing! One note about legal contingencies. Although Uber adjusted its operations subsequent to UK ruling, Uber has a dispute with UK tax authorities regarding the application of VAT.
Based om the 10-Q disclosure: "As of March 14, 2022, we modified our operating model in the UK, such that as of that date Uber UK is a merchant of transportation and is required to remit VAT. Uber UK is remitting VAT under the Value Added (Tour Operators) Order 1987 (“VAT Order 1987”), which allows for VAT remittance on a calculated margin, rather than on Gross Bookings. We have received multiple assessments from the HMRC disputing our application of VAT Order 1987 for the period of March 2022 to March 2024, totaling approximately $1.4 billion (£1.1 billion) for unpaid VAT."
Uber did not record a contingency for this dispute. Moreover, in order to appeal Uber had to pay the assessment and recorded this payment as other receivable. If Uber loses the appeal, they will have to reverse the receivable and record the loss through the P&L. Francine McKenna and I wrote about this:
https://deepquarry.substack.com/p/what-do-numbers-tell-us-about-ubers
Thanks for this great comment. Very interesting!