VAT AND PRIVATE HIRE


rate shopping within the UK, if a PHO licensed outside London can use an agency model to compete against a London licensed operator paying VAT in full.


So, what happens now?


HM Treasury (‘HMT’) launched a consultation entitled the “VAT Treatment of Private Hire Vehicles” in April 2024. HMT’s response to the submissions made during the consultation has been parked pending the final outcome of the litigation just decided at the Supreme Court.


At the same time, Bolt Services UK Ltd (‘Bolt’) is involved in litigation with HMRC over the correct VAT treatment of income received for its ride hailing services. The latest judgment, in favour of Bolt, was issued by the Upper Tribunal (‘UT’) in March 2025, Bolt Services UK Ltd v Revenue and Customs Commissioners [2025] UKUT 100 (TCC).


Subject to HMRC overturning the decision of the UT, Bolt is required to pay VAT on the profit it earns after paying its drivers, rather than the full fare paid by the passenger, a considerable VAT saving. Bolt is using the Tour Operators Margin Scheme (‘TOMS’) to achieve this VAT saving.


HMT and HMRC have several decisions to make:


l HMT is required to respond to the consultation it launched in April 2024.


l As part of that response, HMT should address the possibility of VAT rate shopping within the UK.


l HMRC must decide whether to accept or continue to challenge the Bolt decision in the UT.


One of the options discussed in the HMT consultation is the introduction of a margin scheme, which is similar to TOMS.


Could HMRC decide not to challenge Bolt in the Court of Appeal, allowing HMT to endorse the margin scheme as an option for all PHOs across the UK?


As always, if you have any questions, then please email me at: Jonathan.main@mha.co.uk


PHTM SEPTEMBER 2025


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