- A taxpayer leased apartments in the UK on exempt leases and sublet them to travellers for short periods, paying regular rent to the landlords.
- The issue was whether the supply was within the Tour Operators’ Margin Scheme (TOMS) and therefore only subject to VAT on the margin.
- HMRC challenged this, arguing that TOMS only applied where both the purchase and sale were holiday accommodation.
- The First-tier Tribunal judge rejected this argument, stating that the taxpayer was a tour operator for TOMS purposes and that the apartments were travel facilities.
- The different terms of the purchase and sale did not amount to material alteration, and any changes made by the taxpayer were easily reversible and not material. The appeal was allowed.
Source KPMG
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