Commentary

V16.823 Tour operators' margin scheme—practical implementation of the airline charter option following the changes which came into effect on 1 January 1996

Part V16 Forms and other HMRC material

V16.823 Tour operators' margin scheme—practical implementation of the airline charter option following the changes which came into effect on 1 January 1996

V16.823 Tour operators' margin scheme—practical implementation of the airline charter option following the changes which came into effect on 1 January 1996

VAT Information Sheet 3/96, July 1996

This information sheet clarifies the requirements and practical implementation of the changes for traders in relation to the airline charter option detailed in Press Notice No 50/95.

It has been produced in co-operation with the Association of British Travel Agents (ABTA) and accountants Price Waterhouse. It is to be read in conjunction with Notice No 709/5 “Tour operators' margin scheme” and News Release 50/95.

The information is presented in a question and answer format and supplies some examples of the effects on the VAT payable.

The trader to trader (wholesale) option is covered in Information Sheet 2/96 and the agency option is covered in Information Sheet 4/96.

This information was originally included in Briefing Note VAT5A No 1 issued to all local VAT offices in February 1996.

Charter scheme question and answers

A Background

1 What is the charter scheme?

The charter scheme is where the supply of a charter flight by a tour operator to a customer may be treated as an in-house supply, thus retaining the zero-rating on the provision of transport post 1 January 1996.

To be treated as an in-house supply the chartered goods or services must have been bought in by the tour operator and supplied to the traveller with material alteration. At present, even though a tour operator supplies other services such as airport representation, settlement of taxes, eg APD and accommodation and food as a

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