The Tour Operators Margin Scheme (TOMS) was created for holiday companies.
Accommodation that is bought in and sold without material alteration, falls within TOMS. However, where there is material alteration the accommodation becomes an in-house supply and TOMS can not be used.
Further details are in Notice 709/5
7.6 How an in-house supply of accommodation is made
If you own a hotel and supply accommodation within it, you are making an in-house supply of accommodation.
If you hire, lease or rent accommodation under an agreement whereby you take responsibility for the upkeep of the property and you are required to undertake any maintenance to the fabric of the building (that is, not just cleaning and changing towels or bed linen and so on), you are making an in-house supply of accommodation.
Also, if you buy in accommodation and provide catering staff from separate sources, for example a ski chalet with a chalet-maid, you are making an in-house supply, commonly referred to as ‘catered accommodation’.
HMRC are attacking the use of TOMS for Rent to SA
- Rent to SA is not a tour operator and the services being supplied are not designated travel services – tour operators organise travel in their own name and entrust others with the supply
- The supply made by the landlord is not a ‘designated travel service’ – taking a lease of residential premises, whether furnished or unfurnished for a term of years is not a relevant service for TOMS
- The landlord is not supplying hotel accommodation or short-let accommodation
- If the SA operator furnishes the property that is a material alteration which means TOMS can’t be used
- If the contract requires the SA operator to replace broken glass or deal with condensation or do maintenance that would go beyond routine cleaning and minor repairs
- If the SA operator is responsible for utilities and Council Tax these constitute a material alteration to supply
What about the Landlord?
The landlord is not supplying a Furnished Holiday Let unless they meet the Occupancy Conditions set out in HS253 this will not be the case in Rent to SA as they are not doing short lets they are simply renting out residential property on a long let. They will not be able to claim capital allowances and the they will not avoid section 24 interest restrictions.
