The Upper Tribunal has dismissed HMRC’s appeal and upheld the decision of the First-tier Tribunal [2023] that Bolt’s ride-hailing services fall within the scope of the Tour Operators Margin Scheme (“TOMS”).
Tour Operators Margin Scheme: “TOMS”
Transactions that fall within the scope of TOMS are treated as a single service supplier where the taxpayer is established and subject to VAT in this jurisdiction. TOMS applies to travel services which are bought in from other traders and resold for the purpose of the traveller, without material alteration with VAT accounted for, on the difference between the buy-in and selling prices. However, no VAT is recoverable on the purchase price of buying in the services supplied by the underlying supplier of the goods or services.
Bolt’s VAT dispute
Since 1st August 2022, Bolt has acted as principal in the re-supply of passenger transport by private hire vehicles which it buys from self-employed drivers and resupplies to its customers via its mobile platform. Bolt contracts separately with both drivers and passengers and there is no contractual relationship between the drivers and the customers. Bolt had accounted for VAT under TOMS as suppliers of passenger transport however HMRC took the view that TOMS should not apply, and VAT should be payable on the whole value of the supply.
The issues in the case were (1) whether Bolt provided services of a kind commonly provided by tour operators or travel agents and (2) whether Bolt supplied the services of the drivers to the passengers without material alteration or further processing. Both questions had been found in favour of Bolt and HMRC consequently appealed to the Upper Tribunal on six grounds, five relating to the first issue and one to the second.
Although the Upper Tribunal reached their conclusion on the first five grounds in a slightly different way, they still concurred with those of the First-tier Tribunal and dismissed HMRC’s appeal. Similarly on the sixth ground relating to whether Bolt supplied the services of the drivers to the passengers without material alteration or further processing, the Upper Tribunal reached their conclusion for slightly different reasons to the First-tier Tribunal but nevertheless agreed with the ruling and dismissed HMRC’s appeal on this ground, too.
Time will tell whether, in the face of this latest defeat, HMRC will take this case to the Court of Appeal.
The Upper Tribunal’s decision in favour of Bolt could have significant VAT implications for other ride-hailing companies operating under similar models, including Uber which could be in line to receive over £1 billion back in overpaid VAT from HMRC if their own supplies are also found to fall within the scope of TOMS.
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