Court of Appeal finds in HMRC’s favour in dispute over whether ride-hailing app Bolt could use the Tour Operators’ Margin Scheme to reduce VAT payable on fares
HMRC has succeeded in a significant Court of Appeal case against Bolt Services UK Limited, concerning whether the private hire ride-hailing platform could apply the Tour Operators’ Margin Scheme, known as TOMS, to its passenger fares.
Bolt had previously been successful before both the First-tier Tribunal and the Upper Tribunal. In each case, the tribunals found that Bolt’s supplies of taxi rides fell within the scope of TOMS.
TOMS was introduced through section 53 of the Value Added Tax Act 1994 and the Value Added Tax (Tour Operators) Order 1987, as amended. The scheme was originally intended to simplify VAT accounting for travel agents and tour operators selling complex travel arrangements and packages.
The dispute began in October 2022, when Bolt asked HMRC to confirm that TOMS applied to its ride-hailing services. HMRC considered the request and, by letter dated 28 February 2023, told Bolt that the scheme did not apply.
After Bolt successfully challenged HMRC’s decision twice, the case proceeded to the Court of Appeal, where HMRC appealed the earlier decisions.
The appeal was particularly important for HMRC because a number of similar cases had been paused pending the outcome. The Court of Appeal’s decision, following a two-day hearing in May, therefore represents a major victory for the tax authority.
Giving judgment, Lady Justice Falk said:
‘It might seem strange at first sight that supplies made by Bolt should be regarded as being akin to supplies made by a travel agent or tour operator.
‘But that is, in effect, the conclusion reached both by the First Tier Tribunal and by the Upper Tribunal in this case, based on the relevant Court of Justice of the European Union (CJEU) case law.
‘The critical issue in this appeal is whether that is indeed the effect of those authorities. I have concluded that it is not, and that HMRC’s appeal should therefore be allowed.’
The Court of Appeal also dismissed Bolt’s argument that it ‘cannot properly be distinguished from a “traditional” tour operator’. Bolt had sought to support this argument by saying that ‘travel agents offer services comparable to Bolt’s, such as chauffeur services’.
For HMRC, Eleni Mitrophanous KC argued that:
‘a typical consumer would recognise Bolt as operating in a distinct business sector, the minicab sector, and not as conducting activities akin to those of a travel agent or tour operator’.
Addressing the Upper Tribunal’s concerns about the ‘difficult and resource-intensive exercise’ of distinguishing Bolt’s services from those of a travel agent or tour operator, Lady Justice Falk said:
‘While there will always be difficulties with any test at the margins, I do not consider that this concern justifies the approach of treating the supplies in issue as within the scheme.’
‘To reiterate, Bolt failed to secure a finding from the FTT that travel agents and tour operators provide the same or similar services to Bolt’s on-demand minicab supplies. That is, with respect, obvious.’
The court also considered Bolt’s reliance on HMRC guidance. On that point, Lady Justice Falk stated:
‘I should mention that Bolt sought to place some reliance on HMRC publications.
‘Given that there are judicial review proceedings stayed behind this appeal, I will say no more than that the parts relied on have no statutory force and cannot assist in the determination of this appeal.’
HMRC’s appeal was allowed ‘with the result that Bolt’s challenge to the decision fails’, Lady Justice Falk concluded. The Court of Appeal’s decision was unanimous, with all three judges agreeing.
An HMRC spokesperson said:
‘We welcome the Court of Appeal’s judgment, which confirms our position on the VAT treatment of private hire vehicle operator services of passenger transport.’
The decision also sits alongside legislative changes announced by Chancellor Rachel Reeves at last November’s Budget. The government introduced legislation to ensure that, from 2 January 2026, taxi and private hire operators will no longer be able to use TOMS. The change was made by amending section 53 of VATA 1994 and is expected to raise £725m in its first year of operation.
