Tour Operators' Margin Scheme
This notice cancels and replaces Notice 709/5 (6 September 2019) and provides guidance on the introduction of the temporary 5% reduced rate of VAT that will apply between 15 July 2020 and 12 January 2021.
1.1 What this notice is about
This notice explains how you must account for VAT if you buy in and resell travel facilities as a principal or undisclosed agent (that is, acting in your own name).
It assumes that you have a knowledge of the basic principles of VAT that are explained in Notice 700 “The VAT Guide”.
This notice should be read in conjunction with Notice 709/6 “Travel agents”.
This notice has been updated to reflect legislative changes that temporarily apply a 5% reduced rate on supplies of catering, holiday accommodation, shows and other attractions.
All references in this notice to 'temporarily reduced rated' or 'temporary reduced rate' are to supplies made between 15 July 2020 to 12 January 2021 that temporarily benefit from the reduced rate.
Main narrative treatment—V3.591.
1.2 The law
The relevant VAT law is in the
• VATA 1994, s 53; and Sch 8 Group 8 item 12;
• Value Added Tax (Tour Operators) Order 1987, SI 1987/1806 as amended by the Value Added Tax (Tour Operators) (Amendment) Orders of 1990, 1992, 1995 and 2009.
• VAT Regulations 1995, SI 1995/2518, s 14(1)(n).
• Value Added Tax (Reduced Rate) (Hospitality and Tourism) (Coronavirus) Order 2020, Article 4 – introduction of new Groups into VATA 1994, Sch 7A
Under this law, HMRC has certain powers,