TOMS Flashcards
Describe the case of Sonder Europe
The FTT held that the supply of apartments lease from landlords and used to provide short term accommodation fell within the scope of TOMS
Sonder provided accommodation for travellers in the form of self-contained apartments (average stay of 5 days). These apartments had been leased from third-party landlords in return for annual rents.
Sonder made only cosmetic changes to the apartments before they were let out to travellers e.g. branding. No structural changes were made.
The court rejected HMRC’s arguments and affirmed Sonder’s status as a tour operator under TOMS, concluding that the leased apartments met the criteria for designated travel services.
Describe the case of Bolt Services [2023]
The FTT considered whether Bolt’s supplies fell within TOMS and it hinged on two points that HMRC argued against Bolt:
1. Whether Bolt provided services of a kind commonly provided by tour operators or travel agents, and
2. Whether Bolt supplied the services of the drivers to the passengers without material alteration or further processing.
The FTT found in favour of Bolt that it didn’t mater whether the rides were on demand or scheduled to determine the VAT treatment, transport is a TOMS supply, and there was no material alteration, the taxi service were not in-house services.
“The mobile ride hailing services supplied by Bolt are services of a kind, namely passenger transport, commonly provided by tour operators, or travel agents and the supply falls within the scope of TOMS”.
What is the significance of the Uber cases?
Uber in London was found to be an employer of its ride-sharing drivers and required to charge VAT in 2021, acting as principal.
Uber v Sefton Metropolitan Borough Council 2023 – London operators are treated differently to those outside of London due to licences.
Delta Merseyside Limited and Anor v Uber – the COA ruled that the difference in wording meant that private hire operators are not required to contract as principals to operate lawfully outside of London
Describe the case of The Squa.re Limited
The issue was whether unsold inventory or inventory sold at a loss could affect TOMS calculations.
TSL provided serviced apartments to travellers, the company leased accommodation from the owners of properties who were frequently, private individuals not registered for VAT.
The leases were extended to an annual period meaning Square was committed under the terms of the lease where the accommodation cannot be supplied or not supplied for a profit.
HMRC issued an assessment stating that a zero margin was not permitted by the scheme.
A negative margin arises as a consequence of a lack of profitability, but VAT is a transaction tax and not a tax on profit.
What is the case of Secret Hotels 2?
A travel company which marketed and arranged the sale of holiday accommodation to holiday makers through its website was acting as agent for the providers of the accommodation, so it did not have to account for VAT on those sales
If it was supplying services as principal, TOMS would have applied.
SH, owned by lastminute.com, marketed accommodation through the Med Hotels branded website. Around 94% of the hotels were advertised and sold through other third party travel agents.
The net sum, less commission, paid by customers, was paid by SH to the hoteliers and the contract stated SH2 was an agent,
HMRC disputed this on the grounds of the commercial and economic reality stating that it was dealing with customers in his own name. The SC ruled SH2 was an agent.
