TOMS calculations

By Tolley
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The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • TOMS calculations
  • Records
  • Market values calculations and cost based calculations
  • EU and non-EU supplies
  • Accounting for VAT during the financial year
  • Calculating the selling price
  • Calculating 'market value'
  • Calculating the cost
  • Example calculations

This guidance note provides an overview of the two TOMS calculations that can be undertaken by a business that makes 'margin scheme' supplies. This note should be read in conjunction with the Overview of the Tour Operators Margin Scheme (TOMS) and Operating TOMS guidance notes.

VATA 1994, s 53; VATA 1994, Sch 8, Group 8, item 12; SI 1987/1806; SI 1995/2518, reg 14(1)(n); VAT(Tour Operators) (Amendment) Orders 1990, 1992, 1995 and 2009; HMRC Notice 709/5 ; De Voil Indirect Tax Service V3.591–V3.596 (subscription sensitive); 2006/112/EC , Articles 306–310
Records

Businesses using TOMS need to keep the following records:

  • market value calculation:
    • a record of the market value of each in-house supply made
    • supporting evidence explaining how the market value was calculated
  • full or simplified calculation requires a:
    • record of the total selling price for all margin scheme supplies / packages
    • separate record of the direct costs associated with all margin scheme supplies included in the package, including:
      • standard-rated and zero-rated margin scheme supplies
      • standard-rated, zero-rated, exempt and outside the scope in-house supplies
      • standard-rated, zero-rated, exempt and outside the scope agency supplies where the commission received is readily identifiable
Market values calculations and cost based calculations

There are two TOMS calculations that can be used by businesses:

  • market value calculation – this works on the basis of extracting the selling value of the bought in designated travel services from the package supplied. This is achieved by deducting the market value

More on Margin schemes: