Bolt VAT ruling raises key questions worth BILLIONS for Uber and other ride-hailing firms
The Upper Tribunal’s decision in HMRC v Bolt Services UK Ltd could have significant tax implications for other ride-hailing companies operating under similar models, including Uber and FREENOW.
In siding with Bolt, the tribunal confirmed that on-demand private hire vehicle (PHV) services, when supplied by an operator acting as principal, can fall within the Tour Operators’ Margin Scheme (TOMS) for VAT purposes. This allows VAT to be charged only on the operator’s margin, rather than the full fare.
Uber, like Bolt, operates as a principal in the supply chain following legal and regulatory changes in recent years. That similarity now places it squarely within the scope of TOMS. If Uber were to apply the same VAT treatment, it could significantly reduce its VAT liabilities in the UK.
According to The Telegraph, Uber could be in line to receive £1.3billion back from HMRC if the ride-hail giants were to also fall under the TOMS scheme.
The judgment turns on whether a ride-hailing service is “commonly provided” by travel agents or tour operators and whether the operator buys in the services without materially altering them. The tribunal found that airport transfers, station drop-offs and general point-to-point journeys arranged via apps met those criteria. The fact that such services are on-demand did not rule them out.
This raises the prospect of other PHV firms seeking to apply TOMS, especially those who contract directly with riders and drivers and handle the booking, pricing and customer support.
For HMRC, the ruling presents a challenge. It sought to keep TOMS narrowly applied to traditional travel businesses. The court, however, took a broader view, focusing on the nature of the services rather than the type of company providing them. If widely followed, this interpretation could lead to a shift in how VAT is accounted for across the private hire sector.
