How VAT applies to the supply of travel services has long been seen as one of the most complex areas of VAT. The reality is that although there are some complex areas of VAT to navigate through, this impression largely comes from a misunderstanding of the rules.
The Tour Operators Margin Scheme (TOMS) has been a major source of confusion for travel businesses and this has not been helped by events since the UK left the EU, because there are now two versions, the EU’s and the UK’s version. TOMS is a simplification measure and we can help demystify it.
Leaving the EU has provided an unexpected VAT benefit for some UK businesses who supply travel services enjoyed in the EU. These benefits may not last for ever however, as the EU reviews the scope of TOMS. We can keep you abreast of developments and help you make the most of current opportunities.
Our client, a provider of guided walks and tours, sought our guidance on determining the applicability of the Tour Operators Margin Scheme (TOMS) to their services.
They were approaching the VAT registration threshold and were keen to ensure they had a solid understanding right from the beginning.
We reviewed the various packages provided by the client and advised them which were and weren’t subject to TOMS. We also advised the client how to account for VAT under each package, ensuring they could set up their system to capture the information required.
Our client and their accountant were now ready to register for VAT with a detailed plan of how to deal with the VAT accounting.
An accountant recommended our services to a travel business client. They were uncertain about how to navigate the Tour Operators Margin Scheme (TOMS).
They wanted to clarify the TOMS application process before proceeding with their VAT registration. TOMS is a much-misunderstood VAT scheme and strikes fear into many an accountant.
We reviewed their client’s activities and plans and advised that because the UK was no longer in the EU, they were temporarily outside the scope of TOMS because the EU Commission had still not introduced EU VAT legislation that brought non-EU suppliers within the scope of EU TOMS.
The client was not liable to register for UK VAT and until the EU brings in the revised EU TOMS legislation, they are not likely to be liable to apply EU TOMS VAT either.
TOMS is a special VAT scheme designed for businesses that buy and resell travel services as a package (like accommodation and transport). It simplifies VAT by taxing only the profit margin, rather than the full sales price.
TOMS applies to UK businesses that supply travel services as a principal, not as an agent. It typically applies when travel services are sold in a package and the service is enjoyed in the UK or abroad. We can help you determine if your services fall within TOMS.
Since the UK left the EU, there are now two versions of TOMS, one for the UK and one for the EU. UK businesses may no longer be required to apply EU TOMS when supplying travel services enjoyed in the EU. We help clients navigate this change and plan ahead for possible future updates.
Possibly. Even small businesses can fall within the scope of TOMS if they sell travel services as part of a package. We can assess your offerings and help you set up VAT accounting properly from the start.
Not necessarily. Some UK suppliers of EU travel services may currently benefit from being outside the scope of EU VAT due to the ongoing review of non-EU supplier rules. We can advise based on your specific situation and help you stay updated on regulatory changes.
