Comment from Jonathan Main, VAT partner at MHA the accountancy and advisory firm on the Bolt decision from the VAT Upper Tribunal earlier today.
“This is the latest refuelling stop in a taxi ride which began in 2021 at The Supreme Court, concerning the worker status of Uber drivers. We have since driven past a London landmark on the Transport for London (TfL) licensing requirements for private hire operators, again with Uber at the wheel.
The Uber journey is headed back to The Supreme Court for a second time in July this year, this time to determine the licensing requirements for private hire operators outside London.
The Uber litigation about worker status and particularly licensing requirements has caused London centric operators to rethink their VAT status, as TfL requires operators to act as principal not agent when passengers use its ride hailing services.
In 2022 Bolt implemented a VAT structure known as the tour operators margin scheme (TOMS), which reduced its VAT bill to the margin between the amount paid to the driver and the amount charged to the passenger.
In a landmark judgement of the Upper Tribunal today, Bolt has successfully defended its preferred VAT position against continued challenge from HMRC.
This will be a huge boost to Bolt and no doubt any other operator licensed by TfL.
For operators licensed by local authorities other than TfL, the Bolt decision has little impact. Local authorities continue to issue licenses which permit operators to act as the driver’s agent and in the unlikely event that a taxi driver earns income above the VAT registration threshold, the driver is required to pay VAT. We await the licensing decision of the Supreme Court hearing in July for the future of taxi licensing and operators’ VAT bills outside London.”
