A senior MP who has led the charge against tax avoidance by multinational companies has accused the firm behind a popular cab-hailing smartphone app of unfairly undercutting London taxi drivers by "opting out of the UK tax regime".
Margaret Hodge, chairwoman of the House of Commons Public Accounts Committee, wrote to London mayor Boris Johnson demanding to know why Transport for London allowed cars to take bookings through the Uber app without a licence to operate in the capital.
Because the Uber app is operated via a company in the Netherlands called Uber BV, which makes the booking, takes the payment and issues the receipt, corporation tax is payable in Holland, rather than the UK, she said.
Her comments are likely to reignite a row which has seen taxi and minicab drivers stage protests against California-based Uber in London, Berlin, Madrid and Paris.
In her letter, Mrs Hodge told the mayor of concerns that new entrants such as Uber were "competing unfairly by allegedly failing to comply with many of the regulations laid down by the law".
She added: "I am particularly concerned about the tax structure that Uber and others have apparently constructed and the impact this has both on the public purse and on the livelihoods of London cabbies and private hire drivers.
"This structure allows these new entrants to unfairly undercut London operators by opting out of the UK tax regime. TfL allows this to happen by failing to apply the appropriate regulations to Uber."
Mrs Hodge said TfL was failing to require Uber, and similar operators, to abide by the law which requires minicab operators to have a licence. They would then be obliged to have a base in London and to pay UK tax.
"Surely TfL has a duty to enforce legislation that will ensure a fair and level playing field for all taxi and private hire operators?" she asked the Mayor. "I would be grateful if you could set out the steps you will take to ensure that TfL does not inadvertently allow tax avoidance in London and that all taxi and private hire drivers receive a fair deal."
Mrs Hodge was backed by the Licensed Private Hire Car Association, which represents 20,000 cabbies. LPHCA chairman Steve Wright said: "London's taxi and private hire industries are being compromised by inconsistent licensing enforcement by TfL and the apparent ability for app-based operators like Uber to operate through an offshore tax regime.
"As well as the loss in revenue to the country, a whole industry that has a wonderful compliance record, unlike some of these new apps, is being undermined by foreign entities, working the UK tax system for corporate greed."
But a spokesman for Uber said: "Uber complies with all applicable tax laws, and pays taxes in all jurisdictions, such as corporate income tax, payroll tax, sales and use tax, and VAT. Uber London Limited is a licensed private hire vehicle operator and recently passed the largest inspection of records ever conducted by TfL."
And TfL's chief operating officer for surface transport, Garrett Emmerson, said: "TfL's role is to license and regulate the taxi and private hire industry in London. We do not have any powers in relation to an operator's corporate structure and how or where they pay tax.
"We are fully satisfied that based on our understanding of the relationship between passengers and Uber London, and between Uber London and Uber BV, registered in Holland, that Uber is operating lawfully under the terms of the 1998 Private Hire Vehicles (London) Act."
Steve Garelick, of the GMB union, said: "With what looks to be TfL enabling Uber's tax avoidance, no wonder there are concerns about competition in London's taxi and private hire market.
"This whole debate has until now been about an industry reluctant to adapt, but I would say that the real issue here is that the regulator is playing with two sets of rulebooks - one that allows Uber to skirt the rules and one that sets out miles of bureaucratic red tape for everyone else."