UT (Tax & Chancery) UT/2023/000091 - [2025] UKUT 00014 (TCC)

Grounds 2 and 3 do not therefore arise because we have allowed the appeal on Ground 1. We shall however say a little about Grounds 2 and 3.

HMRC say on Ground 2 that the FTT erred in law in finding that Sonder’s supplies of unfurnished apartments were supplies of designated travel services within the TOMS Order. In particular, it is said that Sonder could not have made onward supplies without furnishing the apartments. The FTT ought to have found that furnishing the apartments constituted a material alteration or further processing of the supply received from the landlords.

HMRC say on Ground 3 that the FTT erred in law in failing to take into account that Sonder carried out significant and meaningful steps to perform its obligations to customers which amounted to a material alteration in the supply. It did so by paying utilities and council tax, and undertaking responsibility for the upkeep of the apartments. It did not merely entrust or sub-contract to a third party the performance of its contractual obligations to customers.

We have found that the FTT applied the wrong test in considering whether the TOMS Order was engaged. In those circumstances, we do not consider it would be helpful to address Grounds 2 and 3 in detail on the hypothetical basis that the FTT had applied the right test. Ground 2 challenges an evaluative judgment of the FTT. In relation to that challenge we must exercise the caution described by the Court of Appeal in re Sprintroom Limited [2019] EWCA Civ 932 at [76] and [77]. In short, if the FTT had applied the right test we would not have been persuaded that we should interfere with an evaluative judgment of the FTT as to whether the supplies of unfurnished apartments had been made without material alteration or further processing.

In relation to Ground 3, we would have adopted the principles described by the Court of Appeal in Volpi v Volpi [2022] EWCA Civ 464. The FTT was not required to set out every aspect of the evidence which it took into account in concluding that there was no material alteration or further processing of the supply, nor was it required to set out every aspect of its reasoning. If the FTT had applied the right test, we would not have been persuaded that the absence of any reference to the matters identified in Ground 3 amounted to an error of law.