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VAT focus: Secret Hotels2: defining an ‘intermediary’ for TOMS

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Past case law decisions and European Commission rulings have confirmed the broad scope of the tour operators’ margin scheme (TOMS). However, in HMRC v Secret Hotels2 [2014] UKSC 16, the Supreme Court’s rejection of HMRC’s arguments for determining whether Secret Hotels2 Ltd was an intermediary or was ‘acting in its own name’, may now make it easier for some businesses to adopt an agency business model. In addition, taxpayers who in the past have applied VAT based upon any previously accepted differential between a disclosed or undisclosed agent, may be able to use it as grounds for submitting reclaims of overpaid VAT going back up to four years.

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