HMRC has successfully challenged ride-hailing giant Bolt over its VAT accounting practices in a £190m tax dispute that could have far-reaching implications for the sector as a whole. The Court of Appeal overturned earlier tribunal rulings, ruling that Bolt's services do not qualify for the Tour Operators' Margin Scheme (TOMS), a tax arrangement typically reserved for travel agents and tour operators.
The core of the dispute centred on whether Bolt's services met the criteria for TOMS, which allows businesses to pay VAT only on their profit margin between purchasing a service and selling it to customers. HMRC argued that Bolt did not meet this criterion, a position now upheld by the Court of Appeal. The court explicitly stated that Bolt's services are "neither identical nor relevantly comparable" to those intended to fall under TOMS, meaning the company must now charge VAT on the full fare collected from passengers, rather than just its commission-based margin.
The ruling has significant implications for the sector, with rival ride-hailing firm Uber currently facing a similar legal challenge concerning a potential £1bn VAT bill. The Court of Appeal's judgment explicitly noted that other cases, including Uber's, were awaiting the outcome of the Bolt appeal, suggesting this decision could have a substantial bearing on Uber's ongoing legal battle and prompt a broader re-evaluation of VAT practices across the UK's ride-hailing sector.
The ruling aligns with long-standing concerns from the Black Cab Drivers' Association regarding competitive fairness in the transport sector. The association has repeatedly urged the government to address what they describe as a 'tax loophole' used by ride-hailing apps, arguing for a level playing field between traditional taxi services and technology platforms.
The estimated £190m tax liability could have a material impact on Bolt's financial performance, while also sparking concerns about the regulatory environment for ride-hailing companies in the UK. The sector is likely to be closely watching developments as this ruling sets a significant precedent for VAT practices within the industry.