Summary
Summary
The UK Court of Appeal ruled in favor of HMRC in the case against Bolt UK Ltd, rejecting TOMS VAT treatment for ride-hailing services.
On June 12, 2026, the UK Court of Appeal issued a decision in HMRC v Bolt Services UK Ltd, in favour of Her Majesty’s Revenue and Customs(HMRC). The Court of Appeal, surprisingly for Bolt, overturned previous decisions by the First-tier Tribunal and Upper Tribunal that were in favour of the ride-hailing platform operator.
The Court of Appeal based its decision on the conclusion that ride-hailing apps such as Bolt cannot comply with the Tour Operator’s Margin Scheme (TOMS), which, when used compliantly, permits the Scheme user to account for VAT only on the profit margin.
The Court concluded that Bolt UK Ltd should have accounted for VAT on the total passenger transport costs, not only on the profit margin. The tax experts share unanimously that this Court’s decision, and its implied effect, shouldn’t be merely limited to the ride-hailing apps model.
It should also be noted that adherence to the TOMS scheme has a very limited window of opportunity. The usage of this simplified and beneficial VAT scheme isn’t of a general nature, but it has very narrow and prescribed statutory requirements that need to be met by the interested parties.
The “room” for using the scheme “in broader terms”, to one’s “extended interest”, could probably be the trigger for HMRC to initiate similar proceedings.
Background of the Case
In the previous cases, both the First-tier Tribunal(FTT) and the Upper Tribunal(UT) ruled in Bolt’s favour, embracing a wide interpretation of the TOMS scheme. The Court’s decision aligned with the approach that the passenger transport services could, at a high level, align with the varieties of services supplied by tour operators.
The ride-hailing app encountered a historic tax dispute in which HMRC claimed that Bolt owes backdated VAT in the value of around GBP 190 million. The representatives of Bolt took the stance that the platform operator acts as a principal in the concerning supply of the transport services, purchased from the self-employed drivers, that are later provided to customers.
Bolt UK Ltd argued that its business model qualified for a specifically designated scheme – TOMS, which is originally intended for travel agents and tour operators. Under the TOMS framework, the VAT should be “only” calculated based on the profit margin, in this case meaning Bolt’s commission.
HMRC v Bolt UK Ltd Decision
The Court of Appeal’s decision in HMRC v Bolt UK Ltd serves as an important reminder and guideline that the Tour Operators Margin Scheme should be interpreted by interested parties as a simplified scheme with a very narrow VAT exception.
The Court’s decision in HMRC v Bolt UK Ltd, which ruled in favour of HMRC, is the latest decision concerning the interpretation and related adherence to the TOMS framework when the provider supplies services that are comparable to services provided by travel agents and tour operators.
After this decision, the economic operators that have applied the TOMS scheme beyond its “foundational” framework could be exposed to HMRC audits for backdated VAT or current VAT treatment.
Court Decision and Service Sector Impact
The Decision could, for the beginning, indirectly influence the concluding remarks on the pending multi-billion dollar VAT appeal in Uber’s case. To stay within the same subject, the decision could also have wider impacts on other pending or future cases concerning private hire and ride-sharing apps or similarly embraced business models by different companies.
There have been different court or tribunal cases that have involved similar HMRC enquiries, considering other service sectors using similar business models, such as the provision of accommodation services.
Takeaway
The narrow interpretation of the Tour Operator’s Margin Scheme will unquestionably enhance the HMRC standpoint to move further with already initiated disputes, or to start with new enquiries against companies operating in similar service sectors that have adhered to the TOMS based on its “wider” interpretation.
Author: Aleksandar Delic
Indirect Tax Manager – E-commerce
Frequently Asked Questions
The UK Court of Appeal ruled in favour of HMRC and overturned earlier decisions by the First-tier Tribunal and Upper Tribunal.
The Court concluded that Bolt could not apply the Tour Operators Margin Scheme to its ride hailing services and should account for VAT on the full passenger transport consideration rather than only on its margin.
The Tour Operators Margin Scheme, commonly known as TOMS, is a special VAT scheme designed primarily for travel agents and tour operators.
Where the statutory conditions are met, VAT is calculated on the supplier’s margin rather than on the full selling price.
Because TOMS is an exception to normal VAT rules, courts generally interpret its scope carefully.
Bolt argued that it acted as principal in supplying passenger transport services purchased from self-employed drivers and resold to passengers.
Under its interpretation, those transport services were sufficiently comparable to services supplied by tour operators, allowing VAT to be calculated only on Bolt’s profit margin.
HMRC took the position that Bolt’s ride hailing activities did not satisfy the statutory requirements of TOMS.
HMRC therefore argued that VAT should have been calculated on the total passenger transport charge rather than only on Bolt’s commission or margin.
The dispute concerns approximately GBP 190 million of historic VAT exposure.
The exact financial outcome may depend on further proceedings, appeals and the final treatment of the relevant periods.
The Court of Appeal decision significantly narrows the scope for ride hailing platforms to rely on TOMS.
Businesses should not assume that services resembling travel activities automatically qualify. Eligibility depends on satisfying the precise statutory requirements of the scheme.
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