Taxi services and TOMS

The UT has upheld the earlier decision of the FTT that supplies of mobile ride-handling services fall within the scope of the Tour Operators Margin Scheme (TOMS) and thus VAT is only chargeable on the margin obtained by the supplier, rather than the whole of the consideration for the transaction: HMRC v Bolt Services UK Ltd [2025] UKUT 100. The UT agreed that the question whether the services provided by Bolt were of a kind commonly provided by tour operators should be approached at a relatively high level. On that basis, the services Bolt provided of on-demand taxi travel were of a kind commonly provided by tour operators or agents, despite the lack of any connection with travel or tours in a broader sense.

The decision is the latest in the long dispute between HMRC and mobile ride hailing businesses, such as Uber, concerning the correct VAT treatment of their supplies, and is a significant win for this industry. 

Background

Bolt provides mobile ride-hailing services on-demand, ordered and paid for via a smartphone app. In 2022, it sought a ruling from HMRC that its services fell within TOMS, a special scheme for travel agents who deal with customers in their own name and use supplies of goods or services provided by other taxable persons in the provision of travel facilities. HMRC rejected that contention on the basis that Bolt was not a travel agent or tour operator and did not provide supplies which were services of a kind commonly provided by tour operators. Bolt appealed HMRC's decision, which only applied to on-demand supplies and not pre-booked supplies which were not offered at the time of the request.

The FTT held that the on-demand taxi services were of a kind commonly provided by tour operators. It considered that travel services generally clearly fell within the scope of TOMS and a forensic approach to the specific features of the travel service was not warranted. As such, neither the fact that taxi rides might be taken to places not typically covered by a travel agent (such as the supermarket) nor the on-demand nature of the taxi services was sufficient to distinguish the transport services from those typically provided by a travel agent.

The FTT also considered that transport services without more could fall within the scope of TOMS. However, if the FTT were wrong on that point and it was necessary for the transport to be part of a wider supply, then the FTT considered that the provision of facilities such as the ability to arrange a journey using a mobile app, help and assistance via the app and information and advice on Bolt's website amounted to sufficient additional services to bring the supply within the scope of TOMS.

Finally, the FTT rejected HMRC's argument that Bolt's services were excluded on the basis that the intervention of Bolt through its app etc meant that the supplies of transport were not materially altered in the course of being on-provided to customers.

Decision of the UT

It was common ground that the UK TOMS provisions were intended to implement Articles 306 to 310 of the Principal VAT Directive (PVD) and as such must be construed in line with those provisions as far as possible. Accordingly, both the FTT and UT considered the case law of the CJEU on the scope of TOMS in some detail. From this case law it was clear that TOMS is restricted to transactions carried out in the provision of travel facilities, but applies to supplies by travel agents, tour operators or any persons who engage in transactions that are identical or at least comparable to those of a travel agent or tour operator.

It was also common ground that Bolt made supplies of taxi services as principal and the main issue was whether its supplies were of a kind commonly provided by tour operators or agents. On this issue, HMRC contended that the FTT had been wrong to address the question whether the transport provided by Bolt was of a kind commonly provided by tour operators at too high a level. Both the nature of the transport (on-demand) and the typical destination, in particular, distinguished Bolt's supplies.

Having considered the wider case law at a CJEU level, the UT held that the authorities do support a broad approach to comparability. Whilst the UT did not consider that it was possible to conclude that everything which is passenger transport on all possible facts falls within the TOMS scheme, it did agree with the FTT that the correct approach is a broad, high level one. Moreover, a detailed approach to the question of comparability would most likely be a difficult and resource-intensive exercise and there was no evidence from the CJEU case law that such a detailed approach was necessary.

On the facts of the case, the UT also agreed that none of the matters raised by HMRC were sufficient to disturb the conclusion that, viewed at an appropriately high level, the supplies of passenger transport made by Bolt were capable of falling within the TOMS scheme as being sufficiently comparable to those provided by travel agents. In particular, the UT noted that all of Bolt's supplies were booked via its app and it was not satisfied that it made any difference to the VAT treatment that they were booked either one week, one day or one minute in advance.

HMRC also argued that Bolt's services fell outside the TOMS scheme as they were not on-supplied for the benefit of the traveller without material alteration. In particular, HMRC pointed to Bolt's position as a licensed operator and the provision of its platform to enable rides to be provided. The UT rejected that argument. The UT was satisfied that the services of the drivers acquired by Bolt were received for the direct benefit of customers and on-provided without material alteration. The features of the app, including reservation and payment, did not alter the nature of the supplies and were consistent with traditional travel agent services.

Comment

The decision that a simple supply of a taxi service booked from a principal using the services of independent providers may fall within TOMS appears surprising when taken at face value. One does not associate travel agents with the provision of taxi services on a stand-alone basis. However, it is clear from CJEU jurisprudence that travel services essentially amount to either accommodation and/or transport and there appears to be no reason why a supply of transport on its own should not qualify.

Given the amount of VAT at stake, both in this case and other potential suppliers (such as Uber), it appears highly likely that HMRC will seek to further appeal this decision. It might also be noted that HMRC have the power within the UK provisions to designate certain descriptions of services to fall outside TOMS but has not (yet) chosen to do so.

If the decision stands on appeal, taxi service arrangers who have not been accounting for VAT under the TOMS could find themselves with more complex VAT accounting requirements under the TOMS, and so it may not be welcomed by all across the industry.