The Commissioners for HMRC v Bolt Services UK Limited

The Tour Operators’ Margin Scheme is an exception to the ordinary VAT rules. A business that is not a travel agent or tour operator can use it only where its supplies are identical or at least comparable to services supplied by such businesses. Comparability must be assessed by reference to the scheme’s rationale and the actual nature of the services. It is insufficient that the supply is passenger transport, relates to a journey, or is provided as a single service. The acceptance that some single, domestic or business-to-business travel services may qualify does not remove this requirement. On-demand minicab rides were not comparable to services commonly supplied by travel agents or tour operators, so the scheme did not apply.

HMRC appealed against the Upper Tribunal’s decision that Bolt’s on-demand private hire vehicle services fell within the Tour Operators’ Margin Scheme under the Principal VAT Directive and its UK implementation. The First-tier Tribunal had allowed Bolt’s challenge to HMRC’s ruling, and the Upper Tribunal agreed: [2025] UKUT 00100 (TCC). Bolt acted as principal, contracting separately with drivers and customers, and argued that its services were travel services comparable to those supplied by tour operators. HMRC argued that on-demand urban minicab services were materially different. The central issue was whether the CJEU authorities required the scheme to be applied at a broad level to passenger transport generally. Ground 2, concerning material alteration and in-house supplies, was not decided.

Lady Justice Falk gave the judgment, with Lord Justice Arnold and Sir Colin Birss agreeing.

1. The appeal was allowed. The decisions below were set aside and re-made, with the result that Bolt’s challenge to HMRC’s decision failed.

2. The scheme’s rationale is to address the practical VAT difficulties arising because travel agents and tour operators frequently supply multiple services, sometimes in different territories. It is an exception to the ordinary VAT rules and must be applied only to the extent necessary to achieve its objective. The court relied on the reasoning in Van Ginkel ([1996] STC 825), Madgett & Baldwin ([1998] STC 1189), Austria ([2008] STC 2610) and Minerva ([2011] STC 532).

3. Although the scheme extends beyond traders formally classified as travel agents or tour operators, the extension is limited to traders supplying identical or at least comparable services. Comparability must be assessed by reference to the scheme’s rationale and the actual nature and manner of the services. A broad classification as passenger transport or travel is insufficient. The wording of section 53(3) of the Value Added Tax Act 1994, referring to services commonly provided by tour operators or travel agents, supported that conclusion.

4. The CJEU authorities accepting that a single service, including accommodation or travel alone, may fall within the scheme did not dispense with the comparability requirement. Nor did the irrelevance of the purpose or duration of travel, or the possibility of business-to-business supplies, assist Bolt. Those conclusions prevent artificial restrictions within the relevant sector; they do not bring an unrelated transport business within the scheme.

5. On the FTT’s findings, Bolt’s on-demand, mainly urban, point-to-point minicab services were not identical or relevantly comparable to services commonly supplied by travel agents or tour operators. Travel agents and tour operators did not compete with Bolt in providing ordinary minicab rides. The FTT’s alternative reliance on an Advocate General’s example concerning a hotel-arranged local taxi was also erroneous: the example concerned an ancillary service, and the VAT treatment of standalone local taxi services had not been considered. Ground 2 did not require determination.

• Court of Appeal (Civil Division) allowed HMRC’s appeal and set aside and re-made the decisions below: [2026] EWCA Civ 720.
• Upper Tribunal (Tax and Chancery Chamber) agreed with the First-tier Tribunal and allowed Bolt’s challenge: [2025] UKUT 00100 (TCC).
• First-tier Tribunal allowed Bolt’s appeal against HMRC’s ruling that the scheme did not apply.