TOMS FOR SA AND R2R IS ON HMRC'S RADAR
What is the Tour Operators Margin Scheme (TOMS)?
Previously, TOMS has been said to apply to serviced accommodation and the R2RSA sector as these supply did loosely tick the boxes, although there wasn’t significant guidance from HMRC on this.
The central issue is around the concept of material alternation, essentially meaning that the supply which has been bought in, has not been materially changed in nature to the end supply that is sold to the customer. In this context, an apartment rented from a third party, and then let out on a short term basis via a booking platform.
This is a big hit for the serviced accommodation sector with many operators falling directly into this category, taking on long leases of unfurnished properties and adding their own furniture. Historically this was accounted for under the TOMS basis, in light of this feedback from HMRC it appears this might not be how they look to treat these supplies in the future.
There are a number of VAT tribunals due to take place over the coming months and if HMRC are successful, then it is probable they will begin to challenge these arrangements across the board.