Tribunal Rules in Favor of Bolt Services UK Limited in VAT Dispute Over Mobile Ride-Hailing Services

Citation: [2023] UKFTT 1043 (TC)
Judgment on

Introduction

In the First-tier Tribunal case of Bolt Services UK Limited v The Commissioners for HMRC, the core subject of the dispute was the correct VAT treatment of mobile ride-hailing services provided by Bolt Services UK Limited (“Bolt”). The appeal centered around the application of the Tour Operators Margin Scheme (TOMS) to these services. The legal assessment involved a detailed analysis of whether the services provided by Bolt could be considered of a kind commonly provided by tour operators or travel agents, which consequently would have an impact on how VAT should be accounted.

Key Facts

Bolt operates a mobile platform offering on-demand and scheduled ride-hailing services. They inquired whether their services could be taxed under TOMS, which permits a tour operator to account for VAT based on the margin between the amount paid by customers and the costs incurred in providing the service. The HMRC contended that Bolt’s services did not qualify for TOMS, leading to Bolt’s appeal. The Tribunal carefully considered the nature of Bolt’s services, the role of the drivers, and the terms of Bolt’s service agreements, as well as the applicable VAT legislation and relevant case law.

The decision involved a nuanced interpretation of VAT law, primarily examining:

  1. Definition of ‘Tour Operator’ and ‘Travel Agent’: The Tribunal weighed whether Bolt’s services could be considered as those commonly provided by tour operators or travel agents under Section 53(3) of the Value Added Tax Act 1994 (VATA) and Article 3(1) of the TOMS Order.

  2. Application of TOMS: The Tribunal analyzed Section 53 VATA and the TOMS Order to determine their consistency with Articles 306-310 of the Principal VAT Directive (PVD) as interpreted by the Court of Justice of the European Union (CJEU). The key issue was whether Bolt’s services, supplied without material alteration or processing, qualify as services for the direct benefit of travelers.

  3. Case Law Reference: The decision references various CJEU cases, including Van Ginkel, Madgett and Baldwin, ISt, Minerva, Star Coaches, European Commission v Kingdom of Spain, Alpenchalets, and C. These precedents focused on elements such as the nature of services provided by tour operators or travel agents, the role of intermediaries, and the direct benefit provided to travelers.

  4. Material Alteration or Processing: The Tribunal contemplated whether Bolt’s addition of platform resources to the drivers’ services constituted material alteration or processing, thus potentially excluding the services from TOMS.

Outcomes

The Tribunal concluded that:

  1. Bolt provides services that are of a kind commonly provided by tour operators or travel agents because they involve passenger transportation – a service intrinsically associated with the activity of such agents.

  2. The services acquired from drivers benefit travelers directly, do not classify as in-house services, nor undergo material alteration or processing by Bolt; thus, they fall within the TOMS.

  3. Even if additional services were needed to qualify for TOMS, Bolt’s additional offerings, like travel advice via their blog, were enough to satisfy this requirement.

Accordingly, the Tribunal allowed the appeal, holding that Bolt’s supply of mobile ride-hailing services falls within the scope of TOMS.

Conclusion

The Tribunal’s analysis in Bolt Services UK Limited v The Commissioners for HMRC underscores the importance of considering the functionality and direct benefits of services when determining their VAT treatment under TOMS. The decision provides guidance for operators in similar industries and affirms the importance of maintaining neutrality and preventing distortion in the competition among various travel service providers. The Tribunal reinforced that a broad view of activities, rather than a myopic focus on specific service features, should guide the application of TOMS. This case serves as a significant precedent for the VAT treatment of ride-hailing services and potentially affects a broad sector of mobility service providers.

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