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VAT and property rental - rule changes (including TOMS)

21 August 2023 / Kevin Hall
Issue: 4902 / Categories: Comment & Analysis , EU VAT directive , HMRC , TOMS , UK VAT , Business
134424
Flawed approach to TOMS

On 5 July 2023 the First-tier Tribunal released its decision in the case of Sonder Europe Ltd (TC8852). The judge found against HMRC and allowed the taxpayer to account for VAT on the margin only rather than on the full sales price as HMRC had contended – a result which will be of particular interest to businesses purchasing property which they rent to travellers.

Background

The rental of qualifying residential property is generally exempt. However positive rates of VAT apply in industries such as tour operators and the hotel sector.

Both these industries are wider than might be expected including anyone outside those industries who make supplies of a similar description.

In the tour operator industry for example the rental of property to travellers is subject to VAT at the standard rate when bought in and supplied on but only with respect to the...

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