08/09/2023
VAT on ‘Rent to Serviced Accommodation’ Supplies
In a recent case between Sonder Europe Ltd and HMRC, the First Tier Tribunal ruled that supplies of leased apartments in the UK that were then let out as holiday accommodation (known as the ‘rent to serviced accommodation’ business model) were subject to the Tour Operators’ Margin Scheme (TOMS).
HMRC had argued that the supplies being made were not ‘designated travel services’ and were not subject to TOMS.
The Tribunal found that the accommodation was not materially altered or processed before being provided by Sonder to the customer, so it met the definition of a “designated travel service’ and was subject to TOMS.
Whilst the ruling does not have legal precedent and may be appealed, the case is significant because the VAT payable on supplies under the TOMS is likely to be much lower than under standard VAT accounting.
It may be that HMRC decides not to appeal, or conversely, we may see that the law itself is changed to exclude this kind of supply from TOMS. We will keep you updated on any developments in this area.
For further information on VATs and the TOMS, please contact us on 023 8046 1254 or email Tom Young.
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