Contents

• EDITOR’S RAMBLE 🗣

• FEATURED REPORT 📰

• IN OTHER NEWS 🗞

• STUFF THAT MIGHT HELP YOU 👌

EDITOR’S RAMBLE 🗣

Last Friday, I launched LittleLaw Pulse.

It's a 7-minute survey that captures how you actually feel about law firms and the application process – the honest stuff you'd never say to a firm directly.

We've already had 426 completions. Huge thank you if you're one of them.

If you've not done it yet, here's what you get when you complete it:

1. Our new applications guide – 3 simple AI prompts that build you a "story bank" before applications open on 1 September. So you're ready while everyone else stares at a blank page.

2. A personalised profile of the kinds of firms you actually align with (based on your answers).

3. Entry into our prize draws (more on that below).

But I need your thoughts on the prizes. There are two types I’m giving away:

1. 🎁 Weekly prizes to everyone who completed each week (the first one goes out this Friday).

2. 🏆 One big prize at the end – a MacBook. Everyone who completes Pulse is automatically in for it.

I want you to pick this Friday's “weekly prize”.

Vote in this poll 👆️ and that's what we'll give away.

If you want to be in the prize draw, complete the survey (it takes 7 minutes).

– Idin

FEATURED REPORT 📰

🚕 Why Bolt just lost a £190 million tax fight

What’s going on here?

Earlier this month, HMRC (the UK's tax authority) won its case against the ride-hailing app Bolt in the Court of Appeal. Because of this, Bolt is now facing a VAT bill of around £190 million.

What is VAT?

VAT (value-added tax) is a tax added to most things you buy. The standard rate in the UK is 20%, and it's included in the price on the shelf – so when you buy a £60 pair of headphones, £10 of that is VAT the shop collects and hands to the government. You never see it as a separate line, but you're paying for it.

Not everything is taxed at 20%, though. The government treats some things as essentials, or as socially useful, and charges less – or nothing at all.

A minicab ride doesn't fall into any of the cheaper boxes. It sits in the standard 20% category, like a restaurant meal or a new phone. But Bolt was paying far less than 20% on its fares.

How was Bolt paying less VAT than a regular taxi business?

Normally, VAT is charged on the full price of a sale. If a taxi service charges £12, that price already includes 20% VAT – so £2 goes to HMRC and the business keeps the remaining £10.

For years, Bolt argued it wasn't really selling you the ride at all. It called itself an agent – not the seller of the ride, just the app that connects you to a driver and takes a fee. On that view, it was the driver who sold you the ride, and Bolt only sold its matchmaking service. So VAT applied to Bolt's cut, not the whole fare.

Let's explain why this matters using a £12 journey on the Bolt app. Say Bolt keeps £3 and the driver gets £9.

Here’s how that would look.

So, with Bolt acting as the seller (not the agent), it pays four times as much tax.

But Bolt doesn’t get to choose the label that suits it.

In April 2022 Transport for London added a new condition to getting a licence – Regulation 9(14) of the Private Hire Vehicles (London) (Operators' Licences) Regulations 2000 – requiring every London operator to act as principal – the seller of the ride – or stop operating.

So from August 2022 Bolt had no choice but to be the seller, and that dragged the whole fare into VAT, not just its margin.

Despite this change, Bolt still had one legal route left to keep its VAT bill down. It argued it qualified for a special VAT scheme called the Tour Operators' Margin Scheme (TOMS).

The dispute in the Court of Appeal was whether this TOMS exception actually applied to Bolt

Why wasn’t Bolt treated like a travel agent?

TOMS doesn't only cover travel agents and tour operators by name. It also covers any business whose service is "identical or at least comparable" to theirs. So Bolt didn't have to be a travel agent – it just had to be close enough. But the Court of Appeal didn’t agree that it was, for two main reasons.

1. 🚫 A special scheme can't be stretched. The margin scheme is an exception to the normal VAT rules, and courts read exceptions narrowly. Lawyers call this strict construction: if you want a special break from the ordinary rules, a clever analogy isn't enough – you have to properly fit the wording and the purpose of the scheme.

2. 🚕 Ask the ordinary passenger. Instead of an abstract comparison, the court asked a practical question: would a normal customer think they were dealing with the travel trade? No. Someone opening Bolt thinks they are booking a taxi – not buying a holiday, or using a travel agent.

The result is that Bolt was ordered by the Court of Appeal to pay around £190 million in VAT. That is the gap between the small amount it was paying and the full amount HMRC says it owed on every fare since August 2022.

Why does this matter beyond Bolt?

This ruling goes further than Bolt. It decides years of unpaid tax, it might push up the price of your next minicab ride, and it sets up an even bigger fight for Uber.

📜 The law is changing anyway – but the old dispute still matters. In the November 2025 Budget, the government changed s.53 Value Added Tax Act (VATA) 1994. From 2 January 2026, taxi and private-hire journeys cannot use TOMS. But Bolt decided to keep fighting it. That’s because the new law only applies from January 2026 onwards. It doesn’t deal with the earlier years, when Bolt was treated as the seller of the ride but paid VAT only on its own commission. The court case decided how much tax Bolt owes for that earlier period.

💷 Your rides will probably become more expensive. Legally, Bolt owes the VAT, not passengers. But companies usually try to recover extra costs by raising prices. Bolt’s easiest way to recover some of that money is likely to be through higher fares. Black cabs have always charged VAT on the full fare. If Bolt’s prices rise, the gap between app-based rides and black cabs may get smaller.

🚕 Uber is next – and the numbers are much bigger. Uber is making the same TOMS argument as Bolt: that it should pay VAT only on its margin, not the full fare. Its case was put on hold while Bolt's went through the courts. That’s because Bolt was the main test case. Other ride-hailing apps, including Uber, were waiting for the courts to decide whether the TOMS VAT scheme could apply to them.

Uber is the biggest company affected and could face more than £1 billion in tax. Now Bolt has lost in the Court of Appeal, Uber has to make the same argument with a major judgment already against it.

Could Uber’s case turn out differently?

Uber is making the same basic argument that Bolt made, and the Court of Appeal has said a minicab app is not similar enough to a travel agent to use the scheme. So the odds are stacked against Uber.

But here is the interesting part. Since 2023 – soon after TOMS became Bolt and Uber’s only legal option – Uber has been turning its UK app into more of a travel platform. Users can now book trains, coaches and flights as well as rides, all as part of one "door-to-door" journey.

Part of this change might be driven by the desire to make its business fit more cleanly within TOMS. It’s hard to say whether this will make a difference in court, but Uber UK’s business is clearly closer to that of a travel agent than Bolt is.

This could even matter for Uber’s VAT payments going forward, despite the government’s November 2025 changes.

Under s.53 VATA 1994, a taxi service may still use the margin scheme when it is sold as part of a wider travel package, rather than as a normal standalone ride. If Uber sells a flight and an airport ride together, the ride may look more like one part of a travel package than a normal minicab journey. That is the type of situation where the scheme may still apply.

It’s not clear whether Uber built these travel features mainly for tax reasons. But the rules give it a reason to keep expanding them, and Bolt’s defeat makes that reason stronger.

How can you use this in your applications?

Here are some ways you can use the insights from this story in your law firm applications.

IN OTHER NEWS 🗞

• 🍞 Associated British Foods (the owner of Kingsmill) has been cleared to buy Hovis for £75 million. The deal creates the UK's biggest bread brand. But the Competition and Markets Authority cleared it on the basis that ABF's bread business would likely leave the market entirely if the takeover collapsed – so the merger wouldn't actually reduce competition. UK bread suppliers have struggled with falling demand and rising costs. ABF is also selling off Primark to focus on its food business.

• 🤖 A German court has ruled that Google can be held liable for false claims made by its AI search summaries. The Munich Regional Court found that Google's AI Overviews linked two companies to scams and fraud, inventing claims that appeared in none of the sources. Google argued its warning that AI “can make mistakes” protected it, but the court said search engines lose their legal protection once they generate completely new statements themselves. The ruling isn't final and Google may appeal.

• ⚖️ Law firms may soon have to tell their regulator before they merge with other firms. The Solicitors Regulation Authority has opened a consultation on forcing firms to flag law firm mergers or acquisitions as early as the heads of terms stage, rather than after completion. It follows the collapse of firms like Axiom Ince and PM Law, where millions in client money went missing. The SRA stresses this is a notification, not an approval process, and is considering fines for firms that stay quiet.

STUFF THAT MIGHT HELP YOU 👌

• 💻️ Free application advice: Check out my YouTube channel for actionable tips and an insight into the lifestyle of a commercial lawyer in London.

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