- UT Ruling on TOMS: The Upper Tribunal (UT) ruled against Sonder Europe Ltd, determining that supplies of bought-in and sold-on accommodation do not qualify for the Tour Operators Margin Scheme (TOMS), effectively allowing HMRC’s appeal and setting aside the previous First-tier Tribunal (FTT) decision.
- Complexity of TOMS Application: The decision introduces complexity to TOMS, originally designed as a simplification, by necessitating an examination of the rights associated with purchased and sold accommodation. The UT clarified that while services do not need to be identical for TOMS to apply, the distinction between a lease (purchase) and a license (sale) for accommodation means that such transactions fall outside TOMS.
- Implications for Accommodation Classification: The ruling raises questions about the classification of accommodation as a travel facility under the VAT Directive. While HMRC allows block-booked hotel rooms to be sold to individual travelers under TOMS, the decision indicates uncertainty regarding how much difference is permissible between the rights bought and sold, particularly when Sonder is not utilizing the accommodation for its own benefit.
Source KPMG
