UK Bolt Drivers Recognized as Employees: VAT & Legal Implications

More than 15,000 UK drivers won in a legal battle against the ride-sharing platform Bolt when the Employment Tribunal published its ruling stating that drivers are not self-employed contractors who run their businesses but employees of Bolt.

In addition to potentially paying drivers more than GBP 200 million for sick leaves and holidays, Bolt could face significant VAT implications.

VAT Implications of the Ruling

There are several things to consider regarding this case and the Employment Court ruling. The first one is that the decision refers only to drivers that are not multi-applying. This means this decision does not apply to drivers who use other ride-sharing apps, such as Uber, to offer their services. Bolt stated that nine in ten drivers that use Bolt also use different apps to find customers.

The second important thing to consider is that Bolt might appeal against this decision and, ultimately, overturn it. However, some VAT-related rules are significant if the decision is not appealed or overturned.

Bolt could become responsible for VAT obligations related to rides provided by drivers considered employees. Under the UK VAT law, these services are subject to a 20% VAT rate. However, if the drivers do not exceed the VAT registration threshold of GBP 90,000, VAT will not be charged.

It remains to be seen how HMRC, as the body in charge of VAT matters, will react to this decision and whether it will request Bolt pay VAT for previous years. In addition to asking for the due VAT, penalties, and interest might also be imposed on Bolt for late payments.

Conclusion

After Uber lost its legal battle, the UK Supreme Court stated that its drivers were not self-employed but employees with full employee rights, such as holiday pay, guaranteed minimum wage, and breaks, this is the second case in a relatively short period that has been ruled in favor of drivers and not in favor of the ride-sharing platform.

These rulings are reshaping the work-related issues for drivers and could contribute to additional VAT obligations for ride-sharing platforms.

Source: UK Employment Tribunal, BBC