TOMS does not extend to on-demand minicab platforms absent comparability with travel agents/tour operators

Introduction

In Revenue and Customs v Bolt Services UK Ltd [2026] EWCA Civ 720, the Court of Appeal (Lady Justice Falk, Lord Justice Arnold and Sir Colin Birss, Chancellor of the High Court) allowed HMRC’s appeal from the Upper Tribunal (Tax and Chancery Chamber). The issue was whether Bolt’s UK ride-hailing supplies of private hire vehicle (“PHV”) transport—made as principal (contracting with customers and separately with drivers)—fell within the Special Scheme for Travel Agents in Articles 306–310 of the Principal VAT Directive (commonly known in the UK as the Tour Operators’ Margin Scheme, “TOMS”), implemented domestically through s.53 VATA 1994 and the Value Added Tax (Tour Operators) Order 1987.

The First-tier Tribunal and Upper Tribunal had held TOMS applied, effectively treating Bolt’s supplies as within the travel-agent/tour-operator scheme. The Court of Appeal disagreed, holding that this result was not compelled by CJEU authority and that TOMS did not apply to Bolt’s “on-demand mini-cab” services.

Summary of the judgment

  • Appeal allowed; the Court set aside and re-made the decisions below so that Bolt’s challenge to HMRC’s ruling failed.
  • The Court held that extending Article 306 beyond “travel agents”/“tour operators” requires the taxpayer’s supplies to be “identical or at least comparable” to those of travel agents/tour operators. A “high-level” categorisation as “passenger transport” is insufficient.
  • On the FTT’s findings, travel agents/tour operators did not commonly provide on-demand point-to-point minicab rides similar to Bolt’s service; therefore the necessary comparability was absent.
  • The Court did not decide HMRC’s “Ground 2” (material alteration / “in-house” supplies), considering it unnecessary given the outcome on Ground 1.

Analysis

1) The legal framework and the dispute

Articles 306–310 PVD create a special VAT regime for travel agents/tour operators who deal in their own name and use third-party supplies to provide “travel facilities”. The key consequences are: (i) treating transactions “in respect of a journey” as a single service (Article 307), (ii) taxing only the margin (Article 308), and (iii) denying input VAT deduction on “direct benefit” components (Article 310).

The economic stakes were large: the Court was told Bolt’s case involved about £190m and that other cases exceeding £1bn awaited the outcome.

2) The core holding: “comparability” is a real constraint, not a formality

The Court accepted that EU case law has broadened Article 306 beyond entities that are travel agents/tour operators “within the normal meaning of those terms”. But it emphasised the limiting condition consistently articulated by the CJEU: the extension applies only where the trader effects identical or at least comparable transactions to those of travel agents/tour operators.

The tribunals had adopted a “high-level” approach: because Bolt supplied passenger transport (a “travel service”), it was treated as within the “kind of activity” covered by TOMS. The Court of Appeal rejected that approach as: (a) insufficiently attentive to the “identical or comparable” requirement, and (b) inconsistent with the scheme’s status as an exception to normal VAT rules to be applied “only to the extent necessary to achieve its objective”.

Critically, the Court treated the FTT’s fact-finding as decisive: the FTT was not satisfied that travel agents/tour operators commonly provided on-demand point-to-point rides similar to Bolt’s. Once that was so, the comparability requirement failed and the TOMS analysis should have ended.

3) Why “single-service” case law did not help Bolt

Bolt relied heavily on authorities showing that TOMS can apply even where there is only a single travel-related supply and even within a single Member State, and that purpose/duration of travel is irrelevant. The Court accepted those propositions but explained why they exist:

  • They prevent an unworkable system in the travel-agent sector where VAT treatment would vary depending on how a travel agent “mixes and matches” travel components for different customers (Van Ginkel; Alpenchalets).
  • They avoid additional conditions (purpose/duration) that would restrict the scheme and distort competition among traders within the scheme’s intended domain (iSt).

But those rationales do not justify pulling in a service that is not comparable to the travel-agent/tour-operator business model in the first place. “Single service” is an answer to how the scheme operates for qualifying traders and comparable transactions; it is not a gateway that converts any “journey” into TOMS.

4) Precedents cited and how they shaped the outcome

The Learning Centre (Romford) v Revenue and Customs Commissioners [2020] EWCA Civ 452

Cited for orthodox interpretive method: usual meaning, context, and purpose. This framed the Court’s emphasis on the heading and purpose of the “Special scheme for travel agents” and the need to treat it as a limited exception.

Case C-163/91 Van Ginkel Waddinxveen BV v Inspecteur der Omzetbelasting, Utrecht [1996] STC 825 (“Van Ginkel”)

Provided the foundational rationale: travel agent operations “most frequently” involve multiple services (transport/accommodation) often across territories; normal VAT rules create practical difficulties. It also established that transport is not essential; accommodation alone may fall within the scheme. The Court of Appeal used Van Ginkel to show the scheme’s sectoral focus and why “single service” inclusion exists—without treating it as a basis to include any journey-like service by non-comparable traders.

Joined Cases C-308/96 and C-94/97 Customs and Excise Commissioners v Madgett & Baldwin [1998] STC 1189 (“Madgett & Baldwin”)

Central to Bolt’s argument and the Court’s rejection:

  • Extension principle: the scheme can apply to non-travel-agent traders where they effect identical transactions, to avoid distortions from “formal classification”. The Court of Appeal treated this as the key gateway test (identity/comparability), not as permission to apply TOMS to any travel-related service.
  • Ancillarity limit: bought-in services that are purely ancillary to an in-house principal supply do not bring the trader within the scheme. The Court of Appeal criticised the FTT’s reliance on the Advocate General’s taxi example, stressing that the CJEU used it to illustrate ancillarity, not to decide the VAT treatment of standalone taxi rides.
  • Exceptionality: the scheme is an exception and must be applied only as necessary.

Case C-349/96 Card Protection Plan Ltd v Customs and Excise Commissioners [1999] STC 270 (“CPP”)

Used to explain “ancillary” elements and the single-supply principle (building on Madgett & Baldwin). It supported the Court’s conclusion that the FTT’s inference from the Advocate General’s taxi illustration was misplaced.

Case C-200/04 Finanzamt Heidelberg v ISt internationale Sprach-und Studienreisen GmbH [2006] STC 52 (“iSt”)

Confirmed extension beyond “normal meaning” travel agents where services are “identical or at least comparable”. Bolt relied on passages rejecting purpose/duration limitations. The Court of Appeal accepted those points but held they do not remove the threshold requirement of identity/comparability.

Case C-291/03 MyTravel plc v Commissioners of Customs & Excise [2006] 1 CMLR 13 (“MyTravel”)

Cited to show that the scheme is about adapting VAT to travel-agent activity and not primarily simplifying accounting; technical apportionments may be required. This reinforced the Court’s resistance to expanding TOMS simply to avoid complexity elsewhere.

Case C-128/05 Commission v Austria [2008] STC 2610 (“Austria”)

Reiterated strict construction of derogations. The Court of Appeal used this theme (along with others) to justify a restrained approach.

Case C-31/10 Minerva Kulturreisen GmbH v Finanzamt Freital [2011] STC 532 (“Minerva”)

Demonstrated that not “any service whatsoever” supplied by a travel agent is covered: standalone opera tickets, unrelated to a journey, are outside Article 26/306. The Court of Appeal used Minerva to show the CJEU’s insistence on boundaries and on avoiding distortions caused by misapplying TOMS.

Case C-220/11 Star Coaches s.r.o v Financni reditelstvi pro hlavni mesto Prahu EU:C:2012:120 (“Star Coaches”)

Highly influential in the Court of Appeal’s reasoning, via its later explanation in Alpenchalets. Although Star Coaches itself arguably misread Van Ginkel, the Court of Appeal considered decisive the CJEU’s later characterisation that the transport operator’s services lacked “any other feature” making them comparable to those of a travel agent/tour operator. This supported the proposition that buying-in transport and reselling it is not, without more, enough.

Case C-557/11 Maria Kozak v Dyrektor Izby Skarbowej w Lublinie EU:C:2012:672 (“Kozak”)

Confirmed that “in-house” elements of packages are excluded from TOMS even if essential. While Ground 2 was not decided, the Court of Appeal cited this line of authority to illustrate that the CJEU confines TOMS to its necessary scope.

Case C-189/11 Commission v Kingdom of Spain EU:C:2013:587 (“Spain”)

Supported that B2B supplies can fall within the scheme and highlighted revenue allocation between Member States. The Court of Appeal accepted B2B inclusion but held it is justified where the supplier is performing the kind of “combining” function typical of the sector—unlike Bolt’s minicab offering.

Case C-552/17 Alpenchalets Resorts GmbH v Finanzamt Munchen Abteilung Korperschaften EU:C:2018:1032 (“Alpenchalets”)

Confirmed that accommodation-only supplies can fall within the scheme and clarified the understanding of Star Coaches. The Court of Appeal relied particularly on Alpenchalets at [32] to rebut the idea that a transport provider can qualify merely because it buys in services.

Case C-108/22 Dyrektor Krajowej Informacji Skarbowej v C. sp. z o.o. EU:C:2023:522 (“C”)

Bolt invoked C to argue that modern intermediaries can qualify even if “far removed” from traditional travel agents. The Court of Appeal distinguished it as still dealing with accommodation (a typical travel-agent supply) and noted the CJEU’s emphasis on advice/help with travel arrangements—features characteristic of travel-agent activity.

Case C-763/23 Direcţia Generală Regională a Finanţelor Publice Iaşi, Direcţia Generală Regională a Finanţelor Publice Iaşi v S. C. Dragoram Tour SRL EU:C:2024:591 (“Dragoram”)

Suggested that passenger transport alone can fall within Article 306 when supplied by a travel agent (airline tickets resold with commission). The Court of Appeal treated it as limited because the taxpayer was a travel agent and comparability was not in issue; additionally, airline ticket sales are commonly made by travel agents.

5) Doctrinal significance: a constrained gateway test

The judgment’s principal doctrinal contribution is to restate, in a UK appellate context, that: the “non-travel-agent” extension of Article 306 is justified only to prevent distortions where the trader effects transactions identical or at least comparable to travel agents/tour operators; it does not convert the scheme into a general “travel” or “transport” margin scheme.

The Court also underscored an evidential point with practical bite: if the fact-finder does not accept that the taxpayer’s supplies are similar to those commonly made by travel agents/tour operators, the claim to TOMS will fail even if the supplies involve “journeys”.

6) Impact

  • Ride-hailing/PHV platforms acting as principal: the decision makes it substantially harder to bring point-to-point urban minicab services within TOMS merely because they are “travel facilities” supplied using third-party drivers.
  • Containment of TOMS expansion: the judgment resists an interpretation that would render the “travel agent/tour operator” focus of Article 306 practically redundant and potentially extend TOMS broadly across the passenger transport sector.
  • Litigation and revenue consequences: given the sums identified, the decision is likely to shape a pipeline of disputes involving app-based mobility platforms and other intermediated transport models.
  • Open issues (Ground 2): the Court expressly left undecided questions about “material alteration”, “in-house supplies”, and the “direct benefit” analysis for PHV arrangements—so future cases may revisit those points where Article 306 comparability is established.

Complex concepts simplified

  • TOMS / “margin scheme”: instead of charging VAT on the full price charged to the customer, the trader charges VAT on its margin (broadly, selling price minus cost of bought-in “direct benefit” services).
  • “Direct benefit of the traveller”: bought-in components that are consumed by, or directly serve, the customer’s travel (e.g., accommodation, passenger transport) and which therefore feed into the margin calculation and input VAT restriction.
  • “In-house supplies”: elements the trader provides itself (using its own resources) rather than buying in from other taxable persons. CJEU case law excludes these from TOMS, requiring apportionment in mixed packages.
  • “Ancillary” services: minor add-ons that are not a goal in themselves for the customer but merely a way of better enjoying the principal service (a concept associated with the single-supply doctrine in VAT).
  • “Identical or at least comparable” transactions: the gateway for applying Article 306 to a non-travel-agent trader; it is aimed at preventing competitive distortions where a non-travel business is, in substance, doing what travel agents/tour operators do.

Conclusion

[2026] EWCA Civ 720 confines TOMS to its intended sphere by insisting on a meaningful comparability threshold when non-travel-agent businesses seek to invoke Article 306. The Court held that Bolt’s on-demand point-to-point minicab service, on the FTT’s findings, was not comparable to supplies commonly made by travel agents or tour operators; accordingly, it fell outside TOMS and remained subject to normal VAT rules.