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Bed bank defeats VAT man after seven-year legal battle
Bed bank Medhotels has won its seven-year battle with the VAT man after a Supreme Court today ruled that the company, which has since changed its name to Secret Hotels2 Ltd, does not have to pay a £7.1 million bill.
The decision, which will have implications for other bed banks who have also been issued with VAT bills, rested on whether Medhotels was acting as an agent or if it was trading as a principal and therefore liable to pay VAT under the Tour Operators Margin Scheme (Toms).
At the first tier tribunal the company was deemed to have been trading as a principal and it was ordered to pay the VAT bill.
The company won its appeal to an upper tribunal, but the decision was reversed by the Court of Appeal.
However, following a Supreme Court hearing on January 29, it was decided that the company was acting as an agent for a principal, which means that VAT is paid in the member state where the accommodation is located, not in the UK
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Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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