RIDE-HAIL TAX WIN: HMRC loses legal fight over Bolt’s VAT treatment
Updated: 7 hours ago
A major tax tribunal decision has confirmed that ride-hailing firm Bolt can apply a special VAT scheme typically used by tour operators. The Upper Tribunal rejected HMRC’s appeal, siding with Bolt and allowing the use of the Tour Operators’ Margin Scheme (TOMS) for its on-demand services.
Bolt had originally won its case at the First-tier Tribunal in December 2023, but HMRC challenged the ruling. The case centred on whether Bolt’s app-based services, where it acts as principal in supplying transport from self-employed drivers, should qualify under TOMS.
HMRC argued that Bolt’s business model was not like that of traditional travel agents or tour operators. It said the company’s ride-hailing service didn’t meet the legal test for TOMS and that the services were “materially altered” before being passed on to customers.
The tribunal disagreed. It found that Bolt’s services involved passenger transport, a type of service often arranged by travel agents, especially for airport and station transfers. It ruled that these kinds of trips, even when arranged last-minute through an app, are comparable to what agents and tour firms often provide.
Bolt’s services were also judged not to be changed in any meaningful way after being bought in from drivers. The drivers remain independent, and Bolt simply matches passengers with available cars using its platform.
The judges added that Bolt’s extra features—such as in-app booking, customer support and travel information—strengthened its position under the scheme, even if such extras weren’t strictly needed.
The decision means Bolt can apply VAT only on its margin rather than the full fare, which could reduce the amount of tax due. The tribunal’s approach may now set a direction for other mobility platforms using similar business models.
For HMRC, the ruling poses a wider challenge in applying VAT rules to digital services in the transport sector. The department had tried to limit TOMS to more traditional setups, but the court has made it clear that structure and function matter more than labels.
A Bolt spokesperson said: “We welcome the court’s decision, which reaffirms that Bolt’s use of the Tour Operators’ Margin Scheme is fully compliant with UK tax law. This is a win for the 100,000 driver-entrepreneurs that earn through our platform, and the millions of passengers that depend on affordable and accessible transport.
“However, uncertainty remains over the Government’s long-term approach to VAT in the private hire sector, and clear and consistent tax policy is required to improve business confidence, encourage investment, and long-term economic growth in the UK.“
