Bolt VAT ruling

The VAT treatment of private hire and ride hailing services has been subject to considerable uncertainty and litigation in recent years. In the latest development, the Court of Appeal has overturned the earlier First tier Tribunal and Upper Tribunal decisions that were in favour of Bolt Services UK Limited.

In HMRC v Bolt Services UK Limited [2026] EWCA Civ 720, the Court held that Bolt’s on demand private hire vehicle services do not fall within the Tour Operators’ Margin Scheme, known as TOMS.

Since 1 August 2022, Bolt’s UK operating model has been to act as principal in supplying private hire vehicle journeys to passengers, rather than merely facilitating supplies between drivers and passengers.

Bolt contracts with self-employed private hire drivers, who provide the vehicles and transport services, and resupplies the journeys to customers through its digital platform. Bolt is responsible for customer invoicing and payment, with no direct contractual relationship between the driver and passenger.

Bolt considered that these arrangements fell within TOMS. Under the scheme, VAT is calculated on the operator’s margin, broadly the difference between the amount charged to the traveller and the cost of the bought in travel services. VAT incurred on those bought in services is not separately recoverable.

This can produce a materially different result from the normal VAT rules. Where TOMS applies, VAT is calculated by reference to the operator’s margin. Where an operator instead acts as principal under the normal rules, VAT is generally accounted for by reference to the full amount charged to the passenger.

HMRC did not accept that TOMS applied to Bolt’s services. The dispute therefore centred on whether Bolt’s activities were sufficiently comparable to those of a travel agent or tour operator and for TOMS purposes. It also raised the question of whether the services purchased from drivers were resupplied without material alteration or further processing.

The First tier Tribunal found in Bolt’s favour. It decided that the supply of mobile ride-hailing services could fall within TOMS and that the services provided by the drivers were not materially altered before being supplied to passengers.

HMRC appealed, but the Upper Tribunal upheld the decision in HMRC v Bolt Services UK Limited [2025] UKUT 100 (TCC). The Upper Tribunal considered that an individual passenger journey could fall within TOMS without being supplied as part of a wider package of travel services. It also agreed that the drivers’ services were not incorporated into a materially different in house service provided by Bolt.

The effect of the Upper Tribunal decision was that Bolt could apply TOMS to its services, subject to satisfying the detailed conditions of the scheme, and account for VAT on its margin rather than the full passenger fare. Please read our preivous article, Bolt UK VAT ruling raises tax questions for ride-hailing services, for more details.

The Court of Appeal has now reversed that outcome and allowed HMRC’s appeal. The Court considered that the issue could not be determined simply by asking whether Bolt supplied travel or passenger transport services. Instead, it focused on the circumstances in which TOMS can apply to a business that is not formally a travel agent or tour operator.

European case law has interpreted the scope of the scheme as extending beyond traditional travel agents and tour operators where a business carries out transactions that are “identical or at least comparable” to those carried out by travel agents or tour operators. This prevents similar transactions receiving different VAT treatment solely because of the formal classification of the supplier.

However, the Court concluded that the necessary comparability had not been established in Bolt’s case. The First tier Tribunal had not found that travel agents or tour operators commonly provide on demand, point to point private hire journeys of the type offered by Bolt.

The Court considered that, on the facts found by the First-tier Tribunal, this should have resulted in Bolt’s case failing. Describing Bolt’s services at a high level as travel or passenger transport did not adequately address whether the transactions were identical or comparable to those ordinarily undertaken by travel agents and tour operators.

Bolt was operating in the distinct minicab and ride hailing sector. The fact that a travel agent might occasionally arrange a taxi or chauffeur service did not mean that Bolt’s standalone, on-demand journeys were sufficiently comparable to the services typically supplied by a travel agent or tour operator.

The Court therefore held that Bolt’s services fell outside TOMS. As that conclusion determined the appeal, it was not necessary to decide HMRC’s alternative argument that the drivers’ services were materially altered or further processed by Bolt. The Court therefore left unresolved the separation question of whether Bolt’s activities involved material alteration or further processing of those services.

From 2 January 2026, UK legislation expressly excludes suppliers of taxi and private hire vehicle journeys from the definition of a tour operator for TOMS purposes.

The exclusion applies to businesses that buy in and resell those journeys as principal or act as an agent in their own name. Affected operators must therefore apply the normal VAT accounting rules rather than calculate VAT under TOMS.

There are, however, limited exceptions. The exclusion does not apply where a private hire or taxi journey is supplied in conjunction with, and is ancillary to, certain other travel services, including accommodation or specified passenger transport services.

This preserves the position for traditional tour operators that include a taxi transfer as an ancillary element of a wider travel package. A standalone journey booked separately from accommodation or another qualifying travel service would not generally fall within the exception.

The change also does not affect journeys supplied directly by a driver to a passenger or arrangements under which an operator acts as a disclosed agent.

The practical position can therefore be summarised as follows:

Operators should consider the following actions:

• Review the contractual model: Confirm whether the operator acts as principal, disclosed agent or undisclosed agent.
• Assess historic periods: Businesses that applied TOMS or submitted protective claims should consider the effect of the Court of Appeal decision and monitor Bolt’s Supreme Court application.
• Confirm the treatment from 2 January 2026: Ensure that VAT accounting reflects the statutory exclusion and that VAT is calculated under the normal rules where required.
• Consider packaged travel separately: Review whether journeys supplied as part of a wider package satisfy the conditions for the limited exception.
• Retain supporting evidence: Contracts, customer terms, driver agreements, invoices and accounting records should clearly support the operator’s role and VAT treatment.

The Court of Appeal decision highlights that buying in and reselling a travel-related service will not, by itself, be sufficient to bring a business within TOMS.

Where a business is not a traditional travel agent or tour operator, it will need to establish that its transactions are identical or genuinely comparable to those ordinarily carried out within that sector before it can apply the TOMS VAT rules. This may have wider implications for digital platforms and other businesses attempting to apply a sector specific VAT scheme to services delivered through a different commercial model.

The immediate position is clearer but not yet final for historic periods. HMRC has succeeded in the Court of Appeal, the legislation excludes most relevant journeys from TOMS from 2 January 2026, and Bolt’s application for permission to appeal to the Supreme Court remains outstanding.

For further information on how the decision and legislative changes may affect your business, please contact your usual Crowe contact.