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

This is an appeal by the Commissioners for His Majesty’s Revenue and Customs (“HMRC”) against a decision of the First-tier Tribunal Tax Chamber (“the FTT”) released on 5 July 2023 (“the Decision”). The FTT held that supplies of accommodation made by the Respondent (“Sonder”) fell within the scope of the Tour Operators’ Margin Scheme (“the TOMS”) for the purposes of Value Added Tax (“VAT”).

We are concerned with supplies made by Sonder in VAT periods 10/17, 01/18 and 04/18. The supplies in question were supplies of accommodation in the UK to corporate and leisure travellers. Sonder leased self-contained apartments from third party landlords for periods between two and ten years. It then granted licenses to travellers to occupy the apartments for periods ranging from a single night up to a month. During the relevant VAT periods the average stay in an apartment by a traveller was five nights.

Sonder accounted for VAT pursuant to the TOMS on its margin, that is the difference between the total amount, exclusive of VAT, payable by the traveller and the cost to Sonder payable to the third party landlords. HMRC contended that Sonder’s supplies did not fall within the TOMS and Sonder ought to have accounted for VAT at the standard rate on the value of supplies to travellers. HMRC assessed Sonder to VAT in the sum of £252,229 for the relevant VAT periods.

The FTT held that the TOMS did apply to Sonder’s supplies of accommodation and allowed its appeal.