The TOMS VAT scheme – another attack by HMRC foiled

We’ve been waiting for the Sondor case to be reported, and delighted that it has come through, and this unwarranted attack by HMRC has been defeated in the First Tier Tribunal. 

 

As specialists in dealing with the TOMS VAT scheme, we always remain vigilant for case law developing. To explain what’s happened here, we need to explain some essential basics of the TOMS legislation … not too techie … but important. 

 

If a supply is rented in, such as an apartment or other property and the SA operator undertakes work such as furnishing or developing it, then the supply is considered to be “materially altered” and TOMS cannot apply. If however, the rented property has NOT been modified, then providing all the other rules have been complied with, TOMS might apply . Let us emphasise that this is just one requirement of compliance with the TOMS rules, and for a detailed review, support from us and others with the expertise is needed. 

 

The argument that HMRC propounded was that if a property is rented in on say a longer term basis (which is what normally happens) and then rented out for shorter periods, HMRC argued that this was a material alteration. 

 

Thankfully, HMRC did not attack a smaller operator with this argument but instead a larger firm with the deeper pockets to fight the case, and the taxpayer has won. This fallacious argument by HMRC was defeated. 

 

If you need the advice and support of specialist property accountants that have the knowledge, skill and experience, contact us on info@property-tax-advice.co.uk 

 

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