Passenger transport services qualify for TOMS

The taxpayer provided passenger transport services in private hire vehicles (PHV) through its smartphone app. The traveller entered their destination on the app and was given a price and estimated journey time for the trip which they could accept or decline. The PHV owners were self-employed and free to decide which journeys to accept.

In October 2022 the taxpayer asked HMRC to confirm that its services qualified as a tour operator margin schemes (TOMS) supply. HMRC refused.

The First-tier Tribunal allowed the taxpayer’s appeal on the basis that passenger transport services were commonly supplied by tour operators and travel agents. HMRC appealed.

The Upper Tribunal said it was necessary to compare the supplies bought by the taxpayer – the services of the drivers – with the supplies made to the customer. It agreed with the First-tier Tribunal that the supplies made by the drivers were made for the...