Summary
This appeal concerned the application of the Tour Operators Margin Scheme (TOMS) to self-contained apartments which the appellant had leased from third-party landlords and sublet the apartments to travellers for different periods from a single night to a month or more. HMRC had ruled that it was not applicable, and the appellant appealed that decision.
Background
The provision of holiday accommodation is subject to standard-rated VAT at 20%. If TOMS can be used, then the amount of VAT payable is significantly reduced because under TOMS the business pays VAT only on the margin, which is the difference between the selling price and the direct costs of the accommodation, including rent, cleaning, etc. Under TOMS, VAT is due at 1/6th of the margin where the accommodation is in the UK.
HMRC contended that the supply by the landlord was not on-supplied by the appellant or, if it was, it was materially