HMRC’s Victory: TOMS Rules Clarified for Travel Sector Leases and VAT Treatment

• Upper Tribunal ruling clarifies TOMS application for travel and accommodation sector
• Sonder Europe Ltd challenged by HMRC for VAT treatment on long-term leased properties
• Sonder initially accounted for VAT using TOMS, but HMRC argued for standard VAT on full supply to travellers
• Upper Tribunal sided with HMRC, providing clarity on TOMS scope
• Direct Benefit Requirement: Services must directly benefit traveller to fall within TOMS
• Material Alteration and Further Processing: Supplies must be passed to travellers without significant changes
• Exempt vs. Standard-rated Supplies: Sonder made standard-rated supplies of short-term accommodation, not eligible for TOMS
• Implications for Travel Businesses: Guidance on TOMS eligibility, avoiding material alterations, and VAT risks for long-term leases

Source: xeinadin.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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