Less Tax for Taxis?: VAT treatment of mobile ride-hailing services in HMRC v Bolt Services UK Ltd

This case concerns the VAT treatment of rail-hailing services provided by Bolt Services UK Limited (“Bolt”). In HMRC v Bolt [2025] UKUT 00100 (TCC), the Upper Tribunal upheld the First-tier Tribunal's (FTT) decision that Bolt's mobile ride-hailing services fell within the Tour Operators' Margin Scheme (TOMS) for VAT purposes. This means accounting for VAT on the margin only (i.e. the difference between the price charged to the traveller and the cost to Bolt).

Facts & Background

Bolt is a licensed private hire vehicle (PHV) operator, which provides on-demand ride-hailing services through a smartphone application. Bolt acts as principal in the re-supply of passenger transport services, buying these services from self-employed PHV drivers and re-supplying them to customers. The Tour Operators' Margin Scheme (TOMS) is a special scheme for VAT purposes. TOMS treats relevant transactions as a single supply by the taxpayer to the traveller.

Bolt submitted that its relevant services fell within TOMS, but HMRC disagreed. The issue was brought before the FTT which found in favour of Bolt. HMRC appealed to the Upper Tribunal which upheld the FTT’s decision, albeit with a slight difference in reasoning.

Decision

The Upper Tribunal addressed two main issues, (the first of which included several sub grounds of appeal in relation to the FTT findings):

1. whether Bolt's services are of a kind commonly provided by tour operators or travel agents; and
2. whether Bolt's services are supplied without material alteration or further processing.

The Upper Tribunal found it was correct to adopt a high-level approach concluding that the supplies made by the drivers, bought in by Bolt, were for the direct benefit of travellers. It was not disputed that Bolt’s customers were travellers for the purposes of TOMS. These supplies were not materially altered as the additional services provided by Bolt, such as on-demand reservation or in-app payment services, do not affect the nature of the transport service supplied by the drivers and received by the customers.

Comment

This case continues the debate on the tax treatment of ride-hailing services. Due to the potential for wider application by similar providers, HMRC almost certainly will appeal. The continuation of legal challenges may be expected where other providers see the opportunity to follow this case for their facts and circumstances.

A 2024 consultation by HM Treasury was undertaken on VAT for PHVs. The outcome of the consultation is awaited. This could bring further changes to the private hire sector, including by way of legislative amendments. The consultation requested submissions on, inter alia, whether drivers should contract with customers directly and floated the idea of a new margin scheme. We expect the outcome of Bolt is of relevance to the consultation.

Similarly, Bolt should be viewed in conjunction with another case, HMRC v Sonder Europe Ltd [2025] UKUT 14 (TCC), which also concerned the application of TOMS to non-traditional companies supplying services to travellers. Sonder entered into long leases as lessee on apartments and granted licenses to occupy serviced accommodation to its customers for periods ranging from one night up to a month. In that case, the Upper Tribunal considered that Sonder’s supplies did not fall within TOMS. Sonder has sought leave to appeal to the Court of Appeal. Questions may also arise as to whether the TOMS provisions appropriately reflect modern travel services.

For further information please email the authors or your usual CMS contact.

This article was prepared with the assistance of Rachel Hii, a trainee in CMS London.