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Appeal judgment rules ride-hailing firm Bolt must pay marginal VAT rather than full fare amount

Updated: Dec 20, 2023



The UK Tax Tribunal has ruled that ride-hailing giant Bolt will NOT be required to pay Value Added Tax (VAT) on the full value of each ride.


The tribunal stated that Bolt will only need to cover the 'marginal' value taken by the operator, rather than the entire cost of the fare.

The ruling comes as a result of Bolt’s appeal against the UK's tax authority, HM Revenue & Customs (HMRC). The appeal specifically addressed the application of the Tour Operator Margin Scheme (VAT Order 1987) to Bolt's operations.


The UK Tax Tribunal's ruling, which was recently made available to the public, states that the private hire vehicle (PHV) services provided by Bolt fall within the scope of the Tour Operator Margin Scheme (TOMS). This scheme sets out long-established rules regarding VAT payments for companies that purchase transportation services from a third party and resell them without making any significant alterations.


Under TOMS, companies are required to apply VAT only on the margin of a trip, rather than on the entire cost of the fare. This means that Bolt will now only have to account for the revenue they take from the fare it charges the passenger.


This ruling is set to have widespread implications not only for Bolt but also for the ride-hailing industry as a whole. Uber's similar litigation on TOMS against HMRC is set to proceed in the first half of 2024.


Bolt's successful appeal against HMRC is likely to open the door for other ride-hailing companies to challenge the VAT payment structure.


“Determining whether a person provides services of a kind commonly provided by tour operators or travel agents by making a detailed examination carries the risk of inconsistent application of VAT to supplies to travellers and distortion of competition between traders in the same sector. That further supports the view that the tribunal should take a general or non- specific view of the activities that are to be compared. Adopting that approach, I conclude that passenger transport services are the kind of services commonly provided by tour operators or travel agents in that such services are generally associated with the type of activity carried on by tour operators and travel agents.
“In my view, the distinction between scheduled and on-demand rides, which is only a matter of timing, cannot be determinative of whether mobile ride-hailing services are services of a kind commonly provided by tour operators or travel agents and thus within the TOMS. Any distinction based on how far in advance a ride was booked would necessarily be arbitrary, eg a ride booked two hours in advance is within the TOMS whereas one booked one hour 59 minutes before the pick-up is not. Such a threshold cannot be determinative. It seems to me that ride-hailing services and scheduled rides cannot be differentiated and are both services of a kind commonly provided by tour operators or travel agents for the same reasons. It follows that I do not need to consider where the dividing line lies between ride-hailing services and scheduled services for the purposes of the TOMS.
“In conclusion, I consider that the supply of mobile ride-hailing services, without any additional elements, to a traveller is a provision of travel facilities within the TOMS in the same way as a supply of accommodation only.”

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