VAT AND PRIVATE HIRE Conclusion
WILL 2025 SEE
The Delta case is key to the future of VAT in your sector.
If Delta successfully defends its victory from the Court of Appeal, the licensing requirements in London will be different from those in the rest of the country. As the VAT position follows the contract, this may create a challenge for HMRC which would naturally prefer a unified VAT position across the UK.
ON PRIVATE HIRE FARES
“From 1 August 2022, Bolt has acted as principal in the re-supply of passenger transport by private hire vehicle (“PHV”), which it buys from self- employed PHV drivers and re-supplies to its customers. Bolt contracts separately with both drivers and passengers and is responsible for all invoicing and payments. There is no contractual relationship between the drivers and the customers. The PHV drivers are independent contractors. They are free to provide PHV transport independently of the platform, including to Bolt’s competitors.”
To coincide with this change, Bolt implemented a VAT structure known as the tour operators margin scheme (“TOMS”), which reduced its VAT bill from the full amount paid by the customer to the margin between the amount paid to the driver and the amount charged to the passenger. There is a striking similarity between TOMS and the margin scheme proposed in the HMT consultation.
HMRC will undoubtedly take this argument to the Court of Appeal with a hearing likely in the first half of 2026. We should have the results of the Delta case in the Supreme Court and the HMT consultation by then.
Again, watch this space. PHTM JUNE 2025 7
Bolt and other ride hailers would also be at a significant financial disadvantage if HMRC successfully overturns Bolt’s victory in the Upper Tribunal. If TOMS does not apply, Bolt and others will be required to pay VAT in full on passenger fares.
If Uber wins at the Supreme Court, the licensing position in London and the rest of the country will be the same. As VAT follows the contract, this would be a disaster for all PHVOs unless a better financial outcome is agreed as a result of the HMT consultation.
The next few months are critical for your sector. Anything you can do to raise the profile of this issue and support Delta’s case at the Supreme Court will be in your interest.
As always, if you have any questions, then please email me at:
Jonathan.main@
mha.co.uk.
‘Future of VAT in the Private Hire Sector’
seminar from the PHTM EXPO, click:
https://www.phtm.co.uk/exhibition/seminar- videos-2025
VAT To watch the
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