Operating TOMS

Produced by Tolley
Operating TOMS

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

  • Operating TOMS
  • How does the temporary reduced rate affect TOMS?
  • How do you calculate the VAT registration limit for TOMS supplies?
  • Can VAT groups make TOMS supplies?
  • What input tax is recoverable?
  • Where is the place of supply of services of tourism related services?
  • Place of supply for margin scheme supplies (excluding in-house)
  • Place of supply for in-house supplies
  • What is the VAT treatment of the margin?
  • What is the agency option?
  • More...

IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marked the end of the Brexit transition / implementation period entered into following the UK’s withdrawal from the EU. At this point in time, key transitional arrangements came to an end and significant changes began to take effect across the UK’s VAT and customs regime. This document contains guidance on subjects potentially impacted by these changes. Before continuing your research, see the Brexit — overview guidance note.

This guidance note provides more detailed information on how TOMS operates. It should be read in conjunction with the Tour Operators Margin Scheme (TOMS) ― overview, TOMS and in-house supplies and TOMS calculations guidance notes.

How does the temporary reduced rate affect TOMS?

This note has not been updated with details of the temporary reduced rate.. Details of the government announcement that a temporary reduced rate has been introduced with effect from 15 July 2020–31 March 2022, which applies to certain supplies made in the tourism and hospitality sector, can be found in the Hospitality industry ― temporary reduced rate from 15 July 2020 to 31 March 2022 guidance note. The reduced rate impacts businesses who make supplies under TOMS.

How do you calculate the VAT registration limit for TOMS supplies?

If a business is providing designated travel services and needs to determine whether it needs to VAT register, the following will be treated as taxable turnover:

  1. total margin achieved on all taxable supplies (zero-rated, standard-rated and reduced-rated)

  2. full value of any taxable (including zero-rated) in-house supplies

  3. full value of any taxable agency commission

  4. full value of any other taxable (including zero-rated) supplies made within the UK

Notice 709/5, para 4.1

For more information on registering for VAT, see the Overview ― registering for VAT and VAT registration procedure guidance notes.

Can VAT groups make TOMS supplies?

Businesses that are members of a UK VAT group can make margin scheme supplies. However a business making margin scheme supplies cannot belong to a UK VAT group if

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