HMRC secures £190m VAT appeal win against Bolt

HMRC has won an appeal against ride hailing platform Bolt over how it calculates and pays its VAT, overturning previous decisions that had ruled in favour of Bolt.

This follows an appeal hearing last month brought by the tax authority, which had questioned whether Bolt could use the tour operators’ margin scheme (TOMS). Under this scheme, businesses only pay VAT on the profit margin they make between buying a service and selling it to the customer.

By qualifying for this scheme, the Estonian tech giant is only required to account for VAT on the commission it takes from the fare, rather than the entire gross fare paid by the passenger. Bolt’s appeal involves an estimated £190m in unpaid VAT.

HMRC argued in February 2023 that Bolt did not qualify for this scheme, and the Court of Appeal backed the tax authority said Bolt should not be allowed to use a tax scheme originally designed for tour operators and travel agents.

The decision overturns two previous upper and lower tribunal decisions which had concluded that Bolt’s services fell within the scheme, and the court in its judgment said Bolt’s services “are neither identical nor relevantly comparable” to those that fall under the TOMs scheme.

This means Bolt is required to charge VAT on the entire fare they charge rather than just on its commission-based margin.

Ride hailing giant Uber has a similar ongoing legal battle over a £1bn VAT bill over TOMS, awaiting to be heard by the tax tribunal, which this decision could impact.

The court said in its judgment other cases, including Uber’s,”are awaiting its [Bolt’s case’s] outcome.”

Black cab drivers already urged that the government must close this tax loophole used by Uber and Bolt, writing to the Chancellor last November asking her to make the tech ride-hailing apps pay the same level of VAT as cabbies.