Her Majesty’s Revenue and Customs (HMRC)’s heavy defeat at the hands of Secret Hotels 2 (formerly Med Hotels) at the Supreme Court last month is a landmark decision which will help many events agencies escape onerous VAT costs.
HMRC have often argued that agencies must account for VAT under the Tour Operator’s Margin Scheme (TOMS), making events more expensive and putting agencies at a competitive disadvantage. Now HMRC has suffered a damaging reversal which will make it more difficult for them to apply TOMS to an agency’s business.
The Supreme Court decided that HMRC’s arguments that Secret Hotels was a supplier of accommodation rather than an agent of the hotel were without foundation. As a result, agencies now have a much greater opportunity to ensure that their VAT declarations and costs reflect their true agency status.
Following the decision, David Bennett, from Saffery Champness on behalf of the EVCOM Regulation Committee, has prepared a paper explaining the possible effect on event agencies of this decision. The decision could see a significant development in how TOMS is applied to EVCOM members.
Brian Kirsch (pictured), Managing Director of Event Assured and Head of EVCOM’s regulation committee, said: “This is another landmark decision on TOMS, which means HMRC are going to have to reconsider their approach to TOMS in the events sector. Once again it highlights the need for reform of TOMS at a European level.”
The new paper is downloadable from the member only area of the new EVCOM website www.evcom.org.uk
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