Bolt wins UK tax tribunal VAT case against HMRC

Bolt, is an on-demand private hire passenger transport service provider and appealed against HMRC's decision that the Tour Operators Margin Scheme (TOMS) did not apply to the services it provided. If it did, Bolt would only account for VAT on its margin.

The FTT considered that the issue of whether Bolt's supplies fell within the TOMS hinged on two points that HMRC argued against Bolt:

1. whether Bolt provided services of a kind commonly provided by tour operators or travel agents, and
2. whether Bolt supplied the services of the drivers to the passengers without material alteration or further processing.

On the first point, the FTT held that a high-level or general view should be taken when assessing whether Bolt's services are those commonly provided by tour operators or travel agents. The FTT decided in favour of Bolt finding that the distinction between on-demand and pre-booked / scheduled rides could not be determinative of the VAT treatment.

On the second point, the FTT viewed that although Bolt indirectly benefitted from the driver’s supplies, the drivers' services directly benefitted the travellers; therefore, were not in-house services or materially altered or processed.

Key takeaway

Both, Sonder Europe Ltd v HMRC [2023] UKFTT 610 (TC) (short-term accommodation) and now Bolt (transport) concern businesses that are not traditional tour operators, and which primarily provide single services in one jurisdiction. However, the TOMS has still been held to apply. It is very likely that HMRC will appeal this decision, as they did after Sonder because of the significant amounts of tax revenue at stake (bearing in mind that drivers do not charge VAT on their services). If HMRC lose, they may consider changing the law, or indeed abolishing TOMS in the UK, now the UK has left the EU following Brexit. It should be noted that when the ViDA package is implemented in the EU, platform operators in the EU will not be able to use TOMS for passenger transport or short-term accommodation.

Reference: Bolt Services UK Ltd [2023] UKFTT 1043 (TC) decision – Bailii