Sonder Europe Limited v The Commissioners for HMRC
Decision date: 5 July 2023
Neutral citation: [2023] UKFTT 610 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
Sonder Europe Ltd appealed HMRC's assessment that its short‑term serviced‑apartment supplies were standard‑rated rather than within the Tour Operators Margin Scheme (TOMS). The tribunal found Sonder acted as a tour operator and that the serviced apartments were designated travel services acquired for business and supplied to travellers without material alteration, so TOMS applied. The appeal was allowed for the periods in question.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: high
The TOMS applies where a trader acquires the right to supply accommodation for business and supplies it to travellers without material alteration or further processing; "material alteration or further processing" requires changes affecting the fundamental character of the service, and reversible cosmetic or furnishing changes do not meet that threshold. The VAT character of the original supplier's transaction does not, by itself, preclude application of TOMS.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The tribunal noted but did not need to decide on the broader significance of the TOMS Order omitting the "taxable person" wording from Article 306 of the Principal VAT Directive. It also observed that HMRC guidance (Notice 709/5) was not determinative and could not override the statutory and directive‑conform interpretation applied.