Upper Tribunal Tax and Chancery Chamber

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

Fecha: 04-Dic-2024

The grounds of appeal

The grounds of appeal

33.

HMRC has three grounds of appeal, for which the FTT granted permission to appeal. The grounds of appeal may be summarised as follows:

(1)

The FTT erred in law at [62] – [65] and [72] – [76] in finding that Sonder’s supplies to customers were designated travel services. The FTT should have held that Sonder’s supply to its customers were not supplied “without material alteration or further processing” and/or that the supplies were not “for the direct benefit” of its customers.

(2)

Further or alternatively, the FTT erred in law in finding at [76] and [77] that Sonder’s supplies of unfurnished apartments were designated travel services.

(3)

Further or alternatively, the FTT erred in law in failing to take into account that Sonder carried out significant and meaningful steps to perform obligations to its customers which amounted to a material alteration to the supply. Namely, paying utilities and council tax, and undertaking responsibility for the upkeep of the apartments.

34.

At this stage we note that it was Sonder’s uncontradicted position in its written argument that it was common ground that it was a tour operator within section 53(3) VATA 1994 because Sonder provided the benefit of serviced accommodation which was of a kind commonly provided by tour operators. Having said that, we note for completeness that when this decision was circulated to the parties for clerical errors and corrections, HMRC stated that this was not in fact common ground. Their position was that Sonder could be a tour operator if it bought in supplies of travel accommodation for the direct benefit of its traveller customers which it resold in its own name to its customers. Whilst Sonder objected to this paragraph being amended, nothing appears to turn on HMRC’s apparent change of position for the purposes of our Decision. It is also common ground that Sonder acquired the leases from landlords for the purposes of its business, so Article 3(1)(a) of the TOMS Order is satisfied.

35.

There is no dispute that the landlords were taxable persons. This is not a requirement in the TOMS Order but it is a requirement of Article 306 PVD. A taxable person for the purposes of the PVD is simply a person who carries out any economic activity (see Article 9 PVD). There is no requirement for the purposes of the PVD that a taxable person should be making taxable supplies or be registered for VAT.

36.

The overarching issue is whether Sonder satisfied Article 3(1)(b) of the TOMS Order which provides that supplies will only be “designated travel services” where they are supplied “for the benefit of a traveller without material alteration or further processing”.

37.

We shall consider the grounds of appeal in the same order. We are grateful to both parties for their clear and succinct written and oral submissions.