Bolt wins tax tribunal case against HMRC

Bolt wins tax tribunal case against HMRC

Jan 2, 2024

Bolt has won its case against HMRC regarding whether the company was liable to pay a 20% tax on the full fare

HMRC and Bolt are in dispute over tax payments and what the company are liable to pay, with the outcome swaying in Bolts favour.

They were deemed not liable to have to pay a 20% tax on the full fare paid by passengers but would only be subject to pay VAT on their margin.

The company claimed that it provided services of the same kind as tour operators and travel agents and therefore should be permitted to use the tax schemes designed for these industries. It is called the Tour Operators Margin Scheme (TOMS).

The tribunal decided on Friday that the services provided by Bolt are likened to the tour operator and travel agent industries, making Bolt only liable for the VAT payment on its margin.

Jonathan Main, VAT partner at MHA said:  ‘Since August 2022 Bolt, along with all private hire businesses in London, has been required to pay VAT on all taxi fares as a result of a change in licensing requirements issued by Transport for London.  Prior to that date, the VAT liability would be with the driver who would not be registered, as their annual income would not exceed the VAT registration threshold of £85,000.

The VAT Tribunal agreed with Bolt that this new arrangement was unfair and that for indirect tax purposes Bolt should be treated the same as tour operators and travel agents. The VAT bill on Bolt’s gross profits is a substantial reduction from VAT on the full fare paid by the passenger.

While the case is likely to be appealed to the Upper Tribunal by HMRC, all London-based private hire businesses can in the meantime submit claims for overpaid VAT in the last 16 months. This is a significant win for all private hire businesses in London which will significantly reduce the financial pain across the sector.’

The Judge bat the FTT said: ‘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.’

An HMRC spokesperson said: ‘We are disappointed with the ruling and are carefully considering the tribunal’s decision.

‘Our view remains that the Tour Operators Margin Scheme (TOMS) does not apply to mini-cab businesses.’