HMRC may need to reimburse Uber £1.3 billion following a court ruling that rejected the tax authority's attempt to impose VAT on minicab fares. This decision could have repercussions for other ride-sharing apps, including Bolt, Uber's competitor from Estonia, and might impact Uber's ongoing dispute with HMRC over the VAT charges initiated in 2022.

Uber and other minicab companies had to adjust their business models in 2022 after a legal ruling classified drivers as workers instead of self-employed, making the companies liable for VAT. Despite HMRC's insistence on applying a 20% tax on the entire fare, Uber and Bolt argued that VAT should only be levied on their respective fees.

Uber, which claims 25% of fares, has been paying significant amounts in VAT annually since the change, leading the company to challenge the charges in court. The case was put on hold pending the outcome of the Bolt lawsuit.

Bolt achieved a victory in the tax tribunal in 2023, establishing that mobile ride-hailing services should be covered by the Tour Operators' Margin Scheme, which taxes businesses based on the operator's charges only. Although HMRC's appeal at the Upper Tribunal was rejected, they are contemplating further action in the Court of Appeal.

A spokesperson for HMRC stated that the government is reviewing the tribunal's decision, while Bolt's spokesperson welcomed the court's ruling, emphasizing that Bolt's tax practices comply with UK law and benefit both drivers and passengers.

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