No Refund Yet: Tribunal Holds Uber’s £1.4billion VAT Pending Bolt’s Fate

The ongoing battle over how ride hailing platforms should be taxed has taken another twist with the First tier Tribunal ruling that HM Revenue and Customs (HMRC) does not have to return the enormous £1,446billion of VAT that Uber previously deposited. Despite the momentum created by Bolts recent success at the Upper Tribunal Uber will need to wait until the appeal journey is complete before any repayment is considered.

Both Uber and Bolt have been arguing that their services fall within the Tour Operators Margin Scheme (TOMS) which would mean accounting for VAT only on the margin not the full fare. Both the First and Upper Tier Tribunal have confirmed that Bolts supplies can fall within TOMS and have dismissed HMRC’s appeal.

The Upper Tier Tribunal held that Bolt’s passenger transport services fall within the category of offerings typically associated with tour operators and travel agents, making them subject to the TOMS.

The Tribunal also concurred with Bolt’s view that the nature of the service delivered by the driver remains essentially unchanged when it reaches the end customer, therefore, it’s not been materially altered.

HMRC is appealing the Upper Tier’s decision to the Court of Appeal.

Uber is making the same claim and has stayed its case behind the Bolt case.

Why Was Uber Required to Deposit the VAT

Under VATA 1994 s84 a taxpayer appealing an HMRC decision must either pay the VAT assessed or prove that paying it would cause hardship. Uber did not submit a hardship application and instead deposited the full amount. Once paid there is no legal mechanism to unwind that decision.

1. HMRCs Manual Says Refunds: Usually Follow an Adverse Upper Tribunal Decision Uber relied on VRM10000, which suggests deposits should be repaid unless there is a genuine risk of non-recovery. The Tribunal held that HMRC was entitled to retain the deposit because the appeal is only being entertained as the sum has already been paid.
2. Uber Offered Financial Guarantees: Uber argued that its parent company had the resources to cover any future VAT liability. The Tribunal accepted that Uber is likely able to pay but noted that likely is not the same as risk free especially with more than a billion pounds at stake.
3. HMRC Not Enforcing New Assessments: Uber said HMRCs commitment not to enforce fresh assessments meant the deposit should also be returned. The tribunal found HMRCs position consistent the deposit stays because it has already been paid and HMRC is pausing new enforcement to maintain fairness.

Judge Sukul concluded that although Uber faces real commercial disadvantage by not accessing the funds this does not outweigh HMRCs legitimate interest in securing the revenue. Bolt has not yet reached its final appeal stage and the sums involved are very large. As no hardship claim was ever made there is no basis to require repayment at this stage.

Result the deposit stays with HMRC. Whether it will ever be returned to Uber, will depend on the outcome of the Bolt case, which could take years to resolve.

Business Impact: What You Need to Know

A hardship application must be made at the very start if you want to avoid paying disputed VAT upfront.

HMRC can lawfully hold very large sums for extended periods until litigation ends.

Demonstrating financial strength does not remove HMRCs right to protect the revenue.

Appealing VAT assessments requires careful planning as early decisions can shape the entire dispute.

Final Thoughts

Taxpayers face a challenging dilemma: they must demonstrate that VAT will be payable if HMRC ultimately prevails, while also arguing that not receiving a refund would cause undue hardship. It’s a precarious and uncomfortable position to be in.

Uber will now need to await the outcome of the Bolt appeal which may reshape VAT treatment for passenger transport operators. For businesses in dispute with HMRC this case shows the importance of early strategic choices especially concerning hardship applications and deposit requirements.

If you’d like to read the full case, please find a link here:

https://www.bailii.org/cgi-bin/format.cgi?doc=/uk/cases/UKFTT/TC/2025/TC09677.html&query=(uber)