There has been an important development in the ongoing Sonder vs HMRC case that affects VAT treatment for serviced accommodation and short-term rental operators across the UK.
The Court of Appeal has now granted a STAY in the case relating to the Tour Operators Margin Scheme (TOMS). While the legal language can sound intimidating, the real-world impact for operators is actually reassuring — at least for now.
Here’s what this means, in simple terms.
What Does a “Stay” Mean?
A stay means the previous ruling has been paused.
The earlier Upper Tribunal decision, which went against Sonder and caused concern across the serviced accommodation sector, is now on hold while the Court of Appeal fully reviews the case.
No final outcome has been decided yet.
Why This Is Good News for the Short-Term Rental Industry
For now, this decision brings much-needed breathing space for operators.
The stay means:
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HMRC cannot currently enforce the Upper Tribunal ruling
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No immediate changes are required to VAT treatment
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Operators are not facing sudden VAT bills
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There is no need for rushed restructuring or panic decisions
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Businesses have time to plan properly and seek professional advice
In short, the industry has been given time — and time matters.
What This Does Not Mean
It’s important to be clear:
This does not mean Sonder has won the case.
The stay simply confirms that the Court of Appeal believes the issue is serious and complex enough to warrant a full review before any enforcement or final decision takes place.
The final ruling could still go either way.
Why This Matters to UK Airbnb and Serviced Accommodation Operators
Depending on the Court of Appeal’s final decision:
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If the court overturns HMRC’s position, TOMS may remain valid for many serviced accommodation and short-term rental business models.
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If the court sides with HMRC, VAT on full turnover could apply to some operators going forward.
Either way, the stay:
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Protects operators in the short term
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Prevents rushed and potentially costly changes
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Allows time for proper structuring and contingency planning
This is particularly important for operators managing multiple units, rent-to-rent portfolios, or corporate stays.
What Operators Should Be Doing Right Now
The key message is don’t panic.
This is not the moment to:
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Tear up your business model
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Make rushed VAT registrations or deregistrations
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Restructure without proper advice
Instead, operators should:
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Stay informed as the case develops
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Review their current VAT position
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Speak to an accountant or VAT specialist who understands serviced accommodation
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Prepare scenarios for different possible outcomes
Good decisions now will protect your business later.
Final Thoughts
The Court of Appeal’s decision to grant a stay in the Sonder vs HMRC case is a positive and stabilising development for the short-term rental sector.
Nothing has been decided yet — but crucially, nothing is being enforced either.
For now, operators can continue trading without immediate disruption while preparing sensibly for whatever the final ruling brings.
At AllthingsBNB, we’ll continue to track developments in short-term rental regulation and VAT so UK hosts and operators can make informed, confident decisions — not reactive ones.
