HMRC Lose VAT Appeal Against Taxi Services!

A recent tax tribunal ruling involving Bolt could have big implications for the private-hire and taxi industry - including black cab drivers!

What Was the Case About?

The case centred around whether Bolt’s ride-hailing services fall under the Tour Operators’ Margin Scheme (TOMS), a special VAT scheme that allows certain businesses to pay VAT only on their margin, not the full amount charged to customers.

What Was Decided?

The Upper Tribunal confirmed that Bolt’s services can qualify for TOMS. This means VAT is only due on Bolt’s commission (margin), not the entire fare.

HMRC had tried to argue that Bolt’s services weren’t comparable to those of a tour operator, but the court disagreed, stating that travel is travel, whether it’s a pre-booked holiday or an on-demand taxi.

How Does This Affect You?

Platforms similar to Bolt, like Gett, Free Now and TaxiApp, should also fall under TOMS. The lower VAT bills will leave these platforms with more money to be competitive in the market. Lower commission for drivers and cheaper fares for customers (which will increase driver demand) is highly likely.

Whilst HMRC may still appeal the ruling, this is a big step in the right direction for the cab industry. Short and Sons Accountants was formed by a licensed London taxi driver in 2017 as a dedicated taxi accountant for drivers. We're always on the lookout for anything to help our clients, and we hope this ruling is here to stay!