What is material alteration?
Essentially, we want to be able to show that the accommodation service the operator is buying from the supplier is identical, or near identical, to the service it is selling on - i.e. the business has not itself done anything to change the nature of the service. One example I often use here is where a business takes a lease for an apartment which is empty, and adds furniture themselves. You wouldn't expect to be able to advertise an empty apartment as tourist accommodation, but adding the furniture means it is possible to market the accommodation to tourists and visitors. As such, I would personally not agree that TOMS can apply to serviced supplied by businesses which have added all the furniture to an empty apartment.
It's not really about me and what I think though! "Material alteration" is not defined in law to a great extent, and there are no UK cases to date which specifically focus on serviced apartment operators. As such, businesses will rely on some brief and not-entirely-related case law, and HMRC's guidance on this point.
HMRC's own public guidance states that material alteration of accommodation (which makes it an "in-house" supply) is where:
"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'."