Bolt and Sonder: What the TOMS Rulings Mean for Travel Businesses

If you sell packages built from hotels, flights and transfers you buy in, the Bolt and Sonder rulings change nothing about how you sell. What they do is settle two questions at the edges of the Tour Operators' Margin Scheme (TOMS), and both went HMRC's way.

The first was the app minicab. The Court of Appeal held in Bolt that TOMS reaches beyond travel agents and tour operators only to supplies that are identical or at least comparable to theirs, and an on-demand minicab ride is not. The second was the leased flat. The Upper Tribunal held in Sonder that short stays in flats it had leased for years, on terms that made it responsible for them, were its own accommodation supply, not travel it bought in and resold.

Both tax appeals have now ended. Bolt lost in the Court of Appeal on 12 June 2026, and the Supreme Court refused permission to appeal on 29 September 2026. The Association of Scotland's Self-Caterers (ASSC) reported on 13 October 2026 that Sonder had withdrawn its appeal, so the Upper Tribunal decision of 14 January 2025 stands.

If TOMS itself is new to you, our full TOMS guide explains the scheme and the year-end calculation first.

The two cases in one minute

HMRC lost both cases at the First-tier Tribunal and won both in the end. The reasons matter more than the result: Bolt is about whether what you sell is comparable to what travel businesses sell, and Sonder is about the gap between what was bought and what was sold.

Case	What was sold	Who won, and where	What it means for you
Bolt Services UK Ltd	On-demand minicab rides, sold as principal since August 2022	Bolt at the First-tier Tribunal and the Upper Tribunal. HMRC at the Court of Appeal. Supreme Court refused permission to appeal.	Buying in transport and selling it on does not, on its own, make you comparable to a travel agent
Sonder Europe Ltd	Apartments leased for two to ten years, let to guests for one night to a month, five nights on average	Sonder at the First-tier Tribunal. HMRC at the Upper Tribunal, upholding an assessment of £252,229.	Short stays in property leased on terms like Sonder's are your own in-house supply of accommodation

What did the Court of Appeal decide in Bolt?

TOMS was written for travel agents and tour operators. The courts have stretched it to other businesses, but only where what they sell is identical or at least comparable to what travel businesses sell (paras 63 and 64). Hoteliers who packaged holidays were in. So was an education provider that organised accommodation and travel abroad. They were doing what travel businesses do.

Bolt was not. Its rides were neither identical nor relevantly comparable (para 66). Or, as Lady Justice Falk put it at para 76, "no one can seriously suggest that travel agents and tour operators offer on-demand mini-cab rides".

The court also dealt with the airport point. A ride that happens to end at an airport, because that is where the customer wanted to go, is not the same thing as an airport transfer sold in a package, and a packaged transfer may be ancillary to the holiday anyway (para 79).

One thing the court did not decide. HMRC's second argument, that Bolt materially altered the drivers' services, was left alone (para 82). The material alteration test is where Sonder comes in.

The court recorded an estimated £190 million at stake in Bolt's own appeal, with other cases worth well over £1 billion waiting on the outcome (para 11). If you are not a travel agent or tour operator and want to use TOMS, what you sell has to look like what they sell.

Are airport transfers still in TOMS?

Yes, when the transfer is sold in the same package as, and ancillary to, a hotel stay or a coach, train, ship or air journey you also supply. The rule for standalone transfers comes from statute, not from Bolt: section 53(3A) of the VAT Act 1994, inserted by Finance Act 2026, section 82, for supplies from 2 January 2026. The Court of Appeal said the VAT treatment of standalone local taxi rides was "simply not considered" in the European case the First-tier Tribunal had leaned on (para 80).

Sold on its own, a taxi or private hire journey has been outside TOMS since that date, and the normal VAT rules apply to it.

HMRC's Revenue and Customs Brief 8 (2025) fills in the detail:

The transfer has to be bought as part of the same package. The hotel or the main journey can be bought in or your own.
A taxi sold only with a theatre trip or an excursion does not count. The package must include accommodation or transport.
"Taxi and private hire" includes chauffeur services, and HMRC says it can include a boat or an aircraft taking someone from A to B at their direction.
A hotel that buys in a taxi at a guest's request, outside the package booked with the room, is outside TOMS for that taxi.
If you arrange transfers as a disclosed agent of the car firm, the change does not affect you.

Illustration, not a real client.

Priya runs a small tour operator in York. She sells a three-night package for £600, made up of a hotel she buys in for £420 and a private hire car to and from the station for £60. The transfer is ancillary to the hotel, so the whole package stays in TOMS.

Her margin is £120, with £20 of VAT in it. The fraction is one-sixth because the margin already includes the VAT (VAT Notice 700, para 7.3.1). On her VAT return the real figure comes from the annual calculation, not booking by booking.

She also sells a standalone airport pick-up for £90, which she buys from a minicab firm for £70. Inside TOMS, the £20 margin would carry £3.33 of VAT. Since 2 January 2026 the normal rules apply instead, and a car with fewer than 10 seats is standard-rated (VAT Notice 744A). The VAT in the £90 is now £15.00.

Outside TOMS, though, Priya can reclaim VAT that the minicab firm charges her. If its £70 includes VAT, that is £11.67 back, and her net VAT stays at £3.33, much as before. If the driver she buys from is not VAT registered, there is nothing to reclaim, and the VAT on that transfer goes from £3.33 to £15.00. That is the line to check on your purchase invoices.

Our TOMS VAT calculator runs the margin side of this on your own figures.

Why did Sonder's serviced apartments fall outside TOMS?

Because Sonder sold something different from what it bought. It took leases of two to ten years, on internal repairing and insuring terms, and had to furnish most of the flats. It then sold guests short licences to stay. The Upper Tribunal held that a lease for years and a few nights' stay are very different bundles of rights, that the landlords' supplies were not for the direct benefit of the traveller, and that Sonder's lets were its own in-house supplies, outside TOMS (paras 113 to 117).

That is not the same as a tour operator that block-books specific rooms for specific nights, or seats on specific ferry crossings, and sells them on. That operator is still reselling travel it bought in (paras 110 to 112). Sonder drew the line between buying specific nights and buying a lease. Which side your own arrangements fall on depends on the rights you actually acquire, read as a whole, and on what you then sell.

HMRC's own notice already said as much. VAT Notice 709/5, para 7.6 says that if you hire, lease or rent accommodation and take responsibility for its upkeep and for maintaining the fabric of the building, you are making an in-house supply. Sonder confirmed it in law.

Illustration, not a real client.

Tom runs four serviced apartments in Manchester. He leases them on three-year leases for £70,000 a year in total, on terms that make him responsible for repairs and insurance, much as Sonder's leases did, and his landlords charge no VAT on the rent. Guests pay him £150,000 a year, for stays of four nights on average.

Tom assumed TOMS applied. On that basis his margin for the year is £80,000, below the £90,000 VAT registration threshold, so he never registered.

On the Sonder reasoning, his lets are in-house supplies of accommodation in serviced flats, which are standard-rated (VAT Notice 709/3, paras 2.1 and 5.2). For the registration test, the full value of taxable in-house supplies counts, not the margin (709/5 para 4.1). £150,000 is well over £90,000. The test looks at any rolling 12 months, and at the next 30 days on their own, so the date he first went over matters too.

Once he is registered, and at the same prices, the VAT in £150,000 is £25,000. There is a small consolation: in-house supplies made on their own are taxed under the normal rules (709/5 para 2.13), so Tom can reclaim VAT on his own costs, such as cleaning, linen and furniture, subject to those rules.

When Tom should have registered, and what he owes for the past, is a question for an adviser, not a blog post. And if he sells a stay together with travel he buys in, a tour for example, as one package, TOMS still applies to that package, with the apartment as the in-house part of the calculation (709/5 paras 2.11 and 2.13).

What about VAT returns before 2 January 2026?

For anyone who used TOMS for taxi or private hire journeys, Revenue and Customs Brief 8 (2025) set out HMRC's position while Bolt was still running:

Operators who had used the normal rules would not be made to rework past VAT periods.
Error Correction Notifications claiming TOMS would be rejected while the litigation continued, and you had to appeal the rejection to protect the claim.
Where TOMS had already been used, HMRC said it might act to protect the revenue.
HMRC would review the position once the Bolt litigation finally concluded.

With permission to appeal refused on 29 September 2026, the Court of Appeal's decision is final. At the time of writing, 21 October 2026, we could find no later update from HMRC on gov.uk.

Sonder looks backwards too. A serviced-apartment business that has been using TOMS for stays in flats it leases should have its past returns reviewed, not just its treatment from here on.

Five checks to run this quarter

List every product with a car transfer in it. Sold in the same package as, and ancillary to, a hotel stay or coach, train, ship or air travel you supply, it can stay in TOMS. Sold on its own since 2 January 2026, it is under the normal rules.
Look at transfers sold only with a ticket or an excursion. They do not meet the accommodation or transport condition, so they are outside TOMS.
If you lease property and sell stays in it, redo the registration test. If those lets are your own in-house supplies, they count at their full value, not at the margin.
Read the contracts behind your accommodation. Did you buy specific nights, or did you take a lease and responsibility for upkeep? The answer, read with the rest of the terms, is the starting point for deciding where you stand after Sonder.
Find any TOMS claims for taxi or private hire journeys before 2 January 2026. Check whether HMRC rejected them and whether the rejection was appealed.

What has not changed

The margin on travel enjoyed in the UK is standard-rated. The margin on travel enjoyed outside the UK, EU included, is zero-rated (709/5 para 4.8).
You still cannot reclaim VAT on travel you buy in and resell under TOMS.
The year-end calculation still runs every year, and it still sets next year's provisional percentage.
VAT Notice 709/5 was last updated on 18 April 2024 and does not yet mention section 53(3A). Read it with Revenue and Customs Brief 8 (2025), in which HMRC said the notice "will be updated in due course".

Priya and Tom are illustrations, not tax advice, and the answer for a real business depends on what its contracts say. Our TOMS guide walks through a full year-end calculation, and the calculator runs it on your own numbers. If you would rather hand it over, we set TOMS up from your contracts and run the quarterly and year-end figures for travel agencies and tour operators.

Frequently asked questions

Did Bolt change how TOMS works for travel agents?

No. Package sales by travel agents and tour operators are unaffected. Bolt decided that a business outside the travel trade can use TOMS only if what it sells is comparable to what travel agents and tour operators sell, and on-demand minicab rides are not.

Are airport transfers still in TOMS?

Yes, when they are sold as part of the same package as, and ancillary to, accommodation or bus, coach, train, ship or air travel that you supply. Taxi and private hire transfers sold on their own have been outside TOMS since 2 January 2026.

Can serviced apartments use TOMS?

Not on their own if you lease the flats for years and sell short stays in them, as Sonder did. The Upper Tribunal held that those lets were Sonder's own in-house supply of accommodation, under the normal VAT rules. If you sell a stay as part of a package with travel you buy in, TOMS applies to the package, and the apartment goes into the calculation as the in-house part with its own VAT treatment.

What if I used TOMS for taxi journeys before 2026?

Have your returns and any claims reviewed. HMRC said it might act to protect the revenue and would review its position when the Bolt litigation ended. The Supreme Court refused permission to appeal on 29 September 2026. As at 21 October 2026, we had found no later update on gov.uk to HMRC's position on past TOMS claims.

Is VAT Notice 709/5 up to date?

Not fully. It was last updated on 18 April 2024 and does not yet reflect the taxi and private hire rule from 2 January 2026. Read it alongside Revenue and Customs Brief 8 (2025).