A Minicab is Not a Package Holiday: Uber's £2.6bn VAT lesson
Uber has been hit with £2.6bn (that’s billion with a B!) of VAT assessments from HMRC relating to their use of TOMS (Tour Operators Margin Scheme).
Whilst Uber has paid roughly £1.4bn to HMRC already with the remaining £1.2bn to be paid shortly; Uber has said they will “vigorously defend” its position and in fact Uber’s own filings state that they expect the full £2.6bn to be returned to them “with interest”.
For the majority of its time operating in the UK, Uber was not charging VAT on any of their fares. Uber’s position was that they were simply a booking agent and that it was actually the driver supplying the ride.
This position fell apart in 2021 when The Supreme Court ruled that Uber drivers were workers and in fact Uber was the principal, not the booking agent. This was significant for Uber as on a £10 fare their output tax due to HMRC jumped from approximately 42p (assuming Uber took a commission of 25%) to approximately £1.67 – an almost 300% increase.
Uber's answer to this was TOMS.
Why TOMS?
TOMS – the Tour Operators Margin Scheme – is a scheme used by businesses that buy in travel services and then resell them in their own name. Under TOMS, instead of accounting for output tax on the full selling price; the tour operator only accounts for output tax on its margin (being the difference between what the customers pays and what the bought in travel services cost). The main downside to TOMS is that you are not allowed to reclaim input tax on the travel services you buy in however if your suppliers aren’t VAT registered in the first place; there’s no loss to you.
Uber’s new position was that they were buying transport services from drivers and then reselling it to passengers in their own name. On a £10 fare this would take the output tax due to HMRC back to approximately 42p – down from approximately £1.67.
Uber’s position wasn’t completely fanciful as private hire journeys are a normal part of what tour operators sell (e.g. airport transfers) and in fact HMRC’s own guidance states that you don’t have to call yourself a tour operator to fall within the scheme. Despite this, and despite the fact that both the First-Tier and Upper Tribunal had ruled that Bolt, a competitor to Uber, was allowed to use TOMS (before these decisions were overturned by the court of appeal); HMRC did not accept Uber’s position.
HMRC issued Uber with an assessment of approximately £386m and because disputed VAT must be paid to HMRC before an appeal can be heard – Uber was forced to pay the assessments before it could fight them.
Bolt Carried the Fight
At HMRC's request, Uber's appeal was put on hold behind a case brought by Bolt on exactly the same point. For a while this looked like very good news for Uber as both the First-Tier Tribunal and the Upper Tribunal agreed with Bolt that they should be allowed to use TOMS.
However, in June 2026 the Court of Appeal overturned both decisions and ruled that Bolt should not be allowed to use TOMS. The Court of Appeal’s reasoning, in short, was that an app-booked minicab to get you across town is not a holiday product, nor is it the kind of multi-element, multi-country arrangement that TOMS was created to simplify.
Bolt did ask the Supreme Court for permission to appeal however this was refused in September 2026 meaning the Court of Appeal’s decision stands. With Bolt out of the way – HMRC was now free to pursue Uber.
Moving Forward
As of 2nd January 2026 taxi and private hire journeys have been specifically taken out of TOMS altogether (unless they’re supplied as part of a wider travel package) so Uber has been forced to stop using TOMS anyway.
This means that Uber’s argument is entirely about the past and this is why HMRC’s assessment only run up to December 2025.
Even though Bolt has exhausted all of their options Uber are very much still entitled to appeal their own decision and per Uber’s own filings; they are expecting the full £2.6bn to be returned to them “with interest”. In reality we think this is unlikely. Although the tribunal will be hearing Uber’s facts rather than Bolt’s – the tribunal will be bound by the Court of Appeal’s reading of the law. With Bolt and Uber’s business model being very similar; it’s difficult to see how Uber will distinguish itself from Bolt.
Practical Points
If you put together travel packages that include transfers, say a hotel stay with an airport transfer, TOMS can still apply to the entire package. The exclusion that came into force on 2nd January 2026 is aimed at the minicab journey on its own – presumably to close the ‘loophole’ that HMRC believe Bolt and Uber have been using.
If you’ve been reclaiming input tax on Uber’s in London – under TOMS there was no VAT for you to reclaim. Check your receipts from Uber if you’re unsure. Post 2nd January 2026 it is possible for you to have been charged VAT so again – check your Uber receipts if you’re unsure.
These cases are a reminder that HMRC takes a narrow view of who is allowed to use TOMS and following the Court of Appeal decision with Bolt; the courts are now more likely to find in HMRC’s favour. We recommend making sure your position would stand up to scrutiny before building your pricing around TOMS.
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