The Commissioners for HMRC v Bolt Services UK Limited

The VAT Tour Operators’ Margin Scheme is defined by the nature of the services supplied, not by the supplier’s formal status as a travel agent or tour operator. A broad, high-level comparison is appropriate when deciding whether bought-in services are of a kind commonly provided by such businesses. Passenger transport may qualify, including a single transport service, although not every service described as passenger transport automatically falls within the scheme.

The bought-in service must also be supplied for the traveller’s direct benefit without material alteration or further processing. Reservation, payment and platform services do not materially alter a driver’s transport service where the customer receives substantially the same conveyance from A to B.

HMRC appealed against the First-tier Tribunal’s decision allowing Bolt’s appeal against HMRC’s ruling that Bolt’s on-demand mobile ride-hailing services were outside the Tour Operators’ Margin Scheme. The FTT held that the services were of a kind commonly provided by tour operators or travel agents and that the drivers’ services were supplied without material alteration or further processing.

The Upper Tribunal considered whether the FTT had erred in its approach to comparability, the relevance of additional services and the treatment of the drivers’ services as bought-in or in-house supplies. It also considered the conforming interpretation of the UK legislation with the Principal VAT Directive.

1. Appeal dismissed. The FTT’s conclusion that Bolt’s on-demand ride-hailing services were capable of falling within the TOMS was upheld. Any errors in the FTT’s reasoning were immaterial.
2. The scheme is not confined to traders formally classified as travel agents or tour operators. Its scope depends on the nature of the services supplied. The comparison with services commonly provided by travel agents or tour operators should ordinarily be made at a broad, high level. Detailed quantitative inquiries into the proportion of comparable services, competition or substitutability are not generally required. The fact that a service is passenger transport does not automatically bring every possible supply within the scheme, but Bolt’s services were sufficiently comparable on the facts.
3. There is no general requirement for a multiplicity of services or a cross-border element. The purpose and duration of travel are irrelevant. A single bought-in transport service may qualify, subject to the requirement that it relates to travel or a journey and is not ancillary to a non-travel principal supply.
4. The requirement in article 3(1)(b) of the TOMS Order must be interpreted consistently with the governing requirement that the bought-in supply be for the traveller’s direct benefit. The relevant comparison is between the service bought in and the service supplied to the customer.
5. The driver supplied conveyance from A to B in a properly maintained, insured, taxed and licensed vehicle. Bolt’s reservation and payment services added value but did not change the nature of that supply. The operator’s licence did not materially alter the driver’s supply. The drivers’ services therefore were not materially altered or subsumed into an in-house supply.
6. The Tribunal did not decide HMRC’s Ground 3 concerning whether Bolt’s additional services could independently satisfy a multiplicity requirement, because HMRC accepted that no such requirement applied and the issue was unnecessary to the result.

The appeal was dismissed on all grounds. Any costs application had to be made in writing within one month under rule 10(5)(a) and (6) of the Tribunal Procedure (Upper Tribunal) Rules 2008.

• Upper Tribunal (Tax and Chancery Chamber): appeal dismissed.
• First-tier Tribunal (Tax Chamber): Bolt’s appeal against HMRC’s ruling was allowed in the decision dated 15 December 2023, [2023] UKFTT 1043.