Bolt’s Court of Appeal Defeat: TOMS and What It Means for Ride-Hailing VAT

In a significant reversal of fortune, Estonian ride-hailing company Bolt has lost its landmark VAT dispute with HMRC at the Court of Appeal. The court ruled that Bolt cannot use the Tour Operators Margin Scheme (TOMS) to reduce the VAT it accounts for on taxi fares, overturning two earlier decisions that had gone in Bolt’s favour.

The ruling, handed down on 12 June 2026, marks a decisive victory for HMRC and has immediate consequences not only for Bolt but for the wider private hire vehicle industry, including rival Uber, which has a parallel case pending with disputed tax deposits of £1.446 billion.

Background

Bolt is an Uber-type platform that supplies on-demand taxi journeys by acting as principal in the re-supply of passenger transport. Since August 2022, Bolt had been buying in transport services from self-employed drivers and re-supplying those journeys to passengers via its mobile app. Bolt contracts separately with drivers and passengers, and no direct contractual relationship exists between the two. On that basis, Bolt argued it was entitled to account for VAT only on its margin under TOMS, rather than charging the full 20% rate on the entire fare.

HMRC disagreed. In February 2023, HMRC wrote to Bolt confirming that TOMS did not apply to its services. That decision prompted Bolt to appeal, setting in motion a legal process that ran through two tribunals before reaching the Court of Appeal.

The First-tier Tribunal and Upper Tribunal Decisions

Both the First-tier Tribunal (FTT) and the Upper Tribunal (UT) had previously ruled in Bolt’s favour. The FTT accepted that Bolt’s mobile platform provided sufficient additional services alongside the transport, such as an information guide and booking functionality, to bring the supply within the scope of TOMS. The UT, on appeal by HMRC, dismissed the authority’s arguments and upheld the FTT’s conclusion, noting that a narrow reading of TOMS would produce competition distortions and practical inconvenience.

Those decisions attracted considerable attention from businesses across the transport and hospitality sectors that had been accounting for VAT under TOMS. However, both decisions always carried the risk that a higher court might reach a different view.

The Court of Appeal Ruling

The Court of Appeal allowed HMRC’s appeal unanimously. A panel of three judges, presided over by Lady Justice Falk, concluded that Bolt’s supplies were not the kind of supplies that TOMS was designed to cover.

LJ Falk acknowledged that it might appear unusual, at first sight, for a ride-hailing platform to be treated as analogous to a travel agent or tour operator. She noted that the FTT and UT had reached that conclusion on the basis of Court of Justice of the European Union case law. However, she held that the relevant EU authorities did not, properly analysed, support the conclusion that TOMS applied to Bolt’s on-demand minicab services.

The court rejected Bolt’s argument that it could not properly be distinguished from a traditional tour operator. Bolt had sought to draw a comparison with travel agents that offer chauffeur services, but HMRC’s barrister Eleni Mitrophanous KC argued that a typical consumer would recognise Bolt as operating in the minicab sector, not as a travel agent or tour operator. The court agreed with that characterisation.

The court also dismissed Bolt’s reliance on certain HMRC publications in the course of its argument. LJ Falk noted that those publications had no statutory force and could not assist in the determination of the appeal. The decision was unanimous: HMRC’s appeal was allowed and Bolt’s challenge to the original assessment failed.

The Major Arguments

One of the central questions was whether the nature of Bolt’s service met the criteria for TOMS. HMRC argued that Bolt’s customers were mostly travelling for shopping, business or short local trips, which placed those journeys outside what tour operators would ordinarily supply. The court found that the correct question was not the purpose of the individual journey but whether the services were sufficiently comparable to those a travel agent or tour operator would provide. On that test, the court held that Bolt’s supplies fell short. The services would need to be virtually identical to, and genuinely comparable with, those supplied by tour operators and travel agents. They were not.

HMRC had consistently argued throughout the litigation that Bolt materially altered the underlying transport service by connecting customers and drivers through its platform and allowing passengers to select their own pickup and drop-off points. The court found that this line of argument needed to be assessed against the correct legal framework. On the facts, the services supplied by Bolt were not of the kind that TOMS applies to, which meant the material alteration point was less critical to the final outcome than it had been in the earlier proceedings.

Implications for Uber

The most significant immediate consequence of the ruling concerns Uber. Uber had kept a similar claim on hold pending the outcome of the Bolt case, and it had deposited with a London tribunal disputed tax sums of £1.446 billion. With the Court of Appeal now having ruled against Bolt, Uber’s position is materially weaker. The direction of travel strongly suggests that Uber faces an uphill task in persuading a court to adopt a broader reading of TOMS for ride-hailing services.

HMRC welcomed the judgment. A spokesperson for the authority confirmed that the ruling confirmed its position on the VAT treatment of private hire vehicle operator services of passenger transport. Bolt expressed disappointment and said it would consider all options available.

The TOMS Legislative Amendment

Events did not stand still while the litigation was progressing. At the Autumn Budget in November 2025, Chancellor Rachel Reeves moved to close the TOMS issue by legislation. An amendment was made to section 53 of the Value Added Tax Act 1994, the provision at the heart of the Bolt dispute, to make clear that taxi and private hire operators are not eligible to use the scheme. The amendment took effect from 2 January 2026 and is not retrospective. HMRC has estimated that the change will raise approximately £725 million in the first year of operation, covering the 2026 to 2027 tax year. Earlier periods remain subject to court determination.

The s53 amendment means that, even if Bolt were to pursue a further appeal to the Supreme Court and were to succeed, the position from 2 January 2026 onwards is governed by the amended legislation rather than by the pre-amendment case law. The litigation therefore has practical relevance mainly to the period before that date.

Challenges and the Road Ahead

The Court of Appeal’s decision confirms that TOMS is a narrow scheme, not a general margin relief available to any business that buys in and resells travel-related services. Businesses outside the private hire sector that have been accounting for VAT under TOMS should treat this judgment as a prompt to review their position carefully.

The ruling is also likely to energise HMRC’s enquiries into other industries that have applied the same model, including providers of serviced accommodation. The Sonder Europe Ltd v HMRC case, which concerns whether TOMS applies to serviced accommodation and which was due to be heard at the Court of Appeal earlier this year following mixed lower tribunal results, will now proceed in an environment shaped by the Bolt decision.

Whether Bolt applies for permission to appeal to the Supreme Court remains to be seen. Given the scale of the commercial amounts at stake across the industry, a further challenge cannot be ruled out.

Conclusion

This ruling closes an important chapter in the TOMS litigation and settles the immediate legal landscape for the ride-hailing sector. What had initially seemed a promising avenue for Bolt and its competitors to reduce VAT costs has been firmly shut by the Court of Appeal, and Parliament has reinforced that position through legislation.

For businesses and advisers navigating the wider application of TOMS, the key message from the judgment is that the scheme should be interpreted by reference to whether the supplies genuinely resemble those of a travel agent or tour operator, not simply whether the business buys in and resells travel-related services. Any business that has been accounting for VAT under TOMS outside a conventional travel agency model should seek specialist advice and assess its exposure to retrospective HMRC enquiry.