Value Added Tax

Tour Operators Margin Scheme (TOMS) ― operating the scheme

Produced by Tolley
  • 22 Dec 2021 18:44

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

  • Tour Operators Margin Scheme (TOMS) ― operating the scheme
  • How is VAT calculated and accounted for under the TOMS?
  • What is the tax point of a TOMS supply?
  • What are the invoicing requirements when operating the TOMS?
  • What special record keeping requirements arise under the TOMS?
  • Can the TOMS interact with other VAT accounting schemes?
  • Practical points ― operating the TOMS

Tour Operators Margin Scheme (TOMS) ― operating the scheme

This guidance note examines the operation of the Tour Operators Margin Scheme (TOMS), including methods of calculating and accounting for VAT and other related operational issues.

For an overview of the TOMS more broadly, see the Tour Operators Margin Scheme (TOMS) ― overview guidance note.

For more in-depth commentary on methods of calculation under the TOMS, see De Voil Indirect Tax Service V3.593.

How is VAT calculated and accounted for under the TOMS?

During a year, VAT under the TOMS is provisionally accounted for in each VAT return by applying provisional percentages worked out during a previous year-end TOMS calculation to net sales figures. If the business has just started to use the TOMS (and has therefore been no year-end calculation) then it has to work out a provisional percentage in a reasonable way, possibly using previous trading figures, projections, etc.

A business must then perform a year-end calculation of VAT due under the TOMS immediately after its financial year-end. Having performed this calculation, it must account for the difference between what was provisionally accounted for on the VAT returns and the amount shown on the year-end calculation as an adjustment. Any adjustment to output tax that arises from this year-end calculation needs to be entered on the VAT return for the first VAT period ending after the financial year-end. It is not possible to wait for audited accounts but if errors are identified during an audit then an error correction will need to be

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