Taxi services and TOMS

The Court of Appeal has taken a commonsense approach to the scope of the Tour Operators Margin Scheme (TOMS) and held that it did not apply to supplies of mobile ride-handling services: HMRC v Bolt Services UK Ltd [2026] EWCA 720. The Court has held that both the FTT and UT were wrong to hold that on-demand minicab services provided by Bolt fell within the scope of TOMS as Bolt failed the test of providing services comparable to those of a tour operator or travel agent.

The decision is now largely of historical interest following changes in the law brought in from 2 January 2026 to exclude taxi services from the TOMS scheme as a result of the earlier FTT and UT decisions in this case.

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 although it was not satisfied that tour operators and travel agents commonly provided on-demand taxi services of a kind commonly provided by Bolt, nevertheless the issue of comparability should be approached at a relatively high level. 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.

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.

Court of Appeal decision

The Court of Appeal has overturned the decisions of the FTT and UT.

Following a review of the caselaw, the Court identified a number of features of TOMS, including:

• The rationale for the Scheme lies in the fact that services provided by travel agents and tour operators frequently comprise a multiplicity of services which may also be provided in different territories. The normal VAT rules would entail practical difficulties which could hinder their operations.
• However, in order to avoid complexity and ensure that the aims of the directive are met, that rationale does not prevent the provision of a single service falling within the Scheme, including one provided in a single territory, provided it relates to a journey.
• Although Article 306 refers only to travel agents and tour operators, that does not prevent other taxpayers from falling within the Scheme who are not travel agents and tour operators, provided they supply identical or at least comparable services.
• What is required is travel. The objective of the travel and duration of a stay are irrelevant.
• More generally, the CJEU has made clear that the Scheme constitutes an exception to the normal VAT rules and must be applied "only to the extent necessary to achieve its objective".

Bearing in mind these features, the Court noted that Bolt put forward an attractive argument that its on-demand taxi services fell within the scheme based on the logic that: (a) the scheme is not restricted to travel agents; (b) it can apply to a single service, provided it relates to a journey; and (c) the scheme has been applied broadly in practice, including irrespective of the purpose of travel or duration of stay.

However, the Court noted that the CJEU has consistently emphasised that TOMS must be applied "only to the extent necessary to achieve its object". In particular, in order not to distort competition, the CJEU has extended TOMS beyond travel agents and tour operators to other businesses provided that they effect "identical or at least comparable" transactions. However, Bolt was not a tour operator and nor did it provide services which were similar or comparable to tour operators. "The CJEU's rationale for extending the scope of the Scheme beyond travel agents and tour operators has no application to supplies that are not in fact similar to supplies made by those sorts of businesses".

The Court has held that the high-level approach adopted by the FTT and UT paid insufficient attention to the need for the services to be "identical or at least comparable" to those provided by travel agents. Bolt's arguments were not saved by the fact that the CJEU has accepted that the Scheme may apply to the provision of a single service. The reason for that was "to avoid complexity and ensure that the aims of the directive were complied with, bearing in mind that the travel agents and tour operators at which the Scheme is aimed offer widely differing types of holiday and journeys, allowing the traveller to combine services as they wish. That reason does not compel a transport offering of a quite different kind to that provided by a travel agent or tour operator to be treated as falling within the Scheme".

The UT expressed particular concern about what it considered would be a difficult and resource-intensive exercise to distinguish between the services in issue and those provided by travel agents and tour operators. While there will always be difficulties with any test at the margins, the Court did not consider that this concern justifies the approach of treating Bolt's supplies as within the Scheme. "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 ordinary meanings of travel agent and tour operator, and the kinds of supply they make and the ways in which they make them, have moved with the times... but no one can seriously suggest that travel agents and tour operators offer on-demand mini-cab rides, or anything comparable to them, whether through apps or otherwise." Such an approach would effectively render the references to travel agents and tour operators in Article 306 effectively redundant.

In any event, the Court noted that it would be insufficient for Bolt to show that some supplies made by some travel agents might be compared to some supplies made by Bolt. "For example, the fact that some journeys Bolt provides are to or from airports or other transport hubs - because that is the location that the customer happens to have chosen as point A or point B - does not make the nature of its offering comparable to the airport transfers that a travel agent might provide (usually, as the FTT said, as part of a package, in which case they may be ancillary in any event). Even if a travel agent can be found that offers chauffeur services to and from other locations and does so as part of a business accepted as falling within the Scheme, then it does not follow that Bolt's services are identical or comparable to those of a travel agent or tour operator as those terms are ordinarily understood, and the FTT did not find that they were. As [HMRC] submitted, 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."

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 always appeared  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 was clear from CJEU jurisprudence that travel services essentially amount to either accommodation and/or transport and the FTT and UT accepted that there was no reason why a supply of transport on its own should not qualify. The Court of Appeal has, however, brought common sense back to the analysis by emphasising the need to have regard to the purpose of the Scheme and the need for comparability between the services of travel agents and Bolt to be viewed in that light.

The decision is now largely of historical interest as the government changed the law with effect from 2 January 2026 to exclude from the Scheme standalone taxi and private hire vehicle journeys.