Julian Borley, VAT director at Milsted Langdon, examines the potential impact of the tribunal ruling on Bolt’s use of the Tour Operator’s Margin Scheme (TOMS) to calculate VAT on taxi rides
Outside of London many taxi firms treat themselves as agents introducing customers to independent vehicle hire providers.
Many taxi drivers operate below the VAT registration threshold, which means that the fare charged can be VAT free but the firm’s fee (commission) to the driver is subject to VAT.
In London, the case is slightly different due to the manner in which drivers are licensed, suggesting that suppliers such as Uber are the ‘principals’ supplying the service so that VAT is due on the entirety of the fare.
In a recent VAT case brought by taxi firm Bolt, which provides a mobile app for booking taxis, the company agreed that it was acting as ‘principal’ but argued that a VAT scheme - the Tour Operator’s Margin Scheme (TOMS) should apply.
TOM
