The decision in Bolt Services UK Ltd - TOMS continues to apply to single services supplied by businesses other than "tour operators"
posted 19th December 2023
In a nice "merry Christmas" from the courts, Bolt has won its TOMS Tribunal case this week. The case concerned the provision of taxi services and questioned whether TOMS could apply to these services where provided by a business who was not itself a "tour operator" and where provided as a standalone service. It also questioned the concept of material alteration again.
I was originally surprised when I heard about this case. Historically, HMRC have maintained the use of TOMS on a very "all-encompassing" basis (I speak often of the time HMRC insisted a supply of catering was within TOMS solely because it took place on an island in the middle of the Thames and the customer needed to take a boat to get to it!). If HMRC had won this case, it could have been a great win for other non-traditional tour operators such as events organisers, charities and MICE operators. I guess the cynical amongst us might think that, now Brexit is well and truly upon us and the TOMS margin for non-UK travel is zero, HMRC have much less to gain by insisting on businesses using TOMS widely!
Anyway, what this means is that businesses which sell single services and are not "tour operators" by definition can continue to use TOMS where they meet the other conditions (being the supply of a travel service in its own name, without material alteration to the end user of the service).
Bolt provided "on demand" taxi services in a similar way to Uber. Its taxi drivers are all self-employed individuals who sell their services (including the car, fuel and themselves as drivers) to Bolt for onwards resale to the individual using the services. Bolt itself is a platform which provided the booking facility and a small amount of ancillary material such as a guide and blog of destinations. HMRC had maintained that because Bolt was providing one single service and never designed tours, it could not be a tour operator within the scope of TOMS, and even if it was, the provision of a single "on demand" taxi service was not itself a tour. HMRC also said that Bolt materially altered the services, although it is not altogether clear what Bolt is supposed to have done to alter these services!
Key to the successful argument in this case was that, although Bolt was not itself a tour operator, the services it provided were found to be of a type commonly provided by tour operators. Although the Tribunal found that it was uncommon for tour operators to provide "on demand" taxi services, the Tribunal suggested it was proper to take a more high level view and that the services were still "comparable" with those supplied by tour operators.
The judge stated that "ff the purpose of the journey does not matter, then why should a feature such as the ability of a customer to specify the place of departure or destination without restriction affect whether it falls within TOMS"? Basically, a distinction in whether TOMS applies based on how far in advance a service is booked is not practical and is arbitrary (and, between you and me, would be completely open to manipulation by business and their advisors!).
HMRC's point about material alteration is not clear but it appears that the argument is that Bolt materially alters the provision of the services by the use of its technology platform which gives the ability to customers to set the pick up point and drop off point (without which, presumably, the drivers could not fulfil this USP). The Tribunal did not comment on this in much detail at all, but fond that although Bolt's services provided a benefit to the driver and customer, the actual service used by the customer (the transport) was not altered from the condition it was bought from Bolt in.
It is good news that yet another TOMS case has been decided in favour of the taxpayer. Historically, at both UK and EU level, most cases involving TOMS appear to decide in favour of the use of TOMS (regardless of whether this is good or bad news for the taxpayer!).
It is also welcome news for those following the Sonder Tribunal case that we have another case in the UK courts which finds in favour of the use of TOMS for a business providing a single service without being a tour operator, and that it is clear that the idea of material alteration within TOMS must be more significant.
I do wonder whether, if HMRC keep losing cases relating to TOMS, they may seriously considering getting rid of the scheme, or heavily revising it in their favour. This is a point that we as TOMS advisors have been discussing considerably over the past few years and we do see this as a serious option now.
We of course need to wait to see if this case will be appealed, and we will be following this, and the appeal in Sonder, closely.