Overview of the Tour Operators Margin Scheme (TOMS)

By Tolley

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

  • Overview of the Tour Operators Margin Scheme (TOMS)
  • What is TOMS?
  • Supplies outside the scope of UK TOMS
  • How does TOMS operate?
  • Supplies within the scope of TOMS
  • Passenger perks
  • In-house supplies
  • Agency supplies
  • Overseas establishments
  • Supplies to other businesses
  • Incidental supplies

This guidance note provides an overview of the main aspects of the Tour Operators Margin Scheme (TOMS). It should be read in conjunction with the Operating TOMS, TOMS and in-house supplies, TOMS calculations and Travel agents 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
What is TOMS?

TOMS is a specific VAT accounting scheme that is intended to be used by businesses that buy-in and re-sell travel, accommodation and certain other connected services either as a principal or undisclosed agent.

Businesses using TOMS are able to take advantage of a VAT simplification that will, in many instances, alleviate the requirement for the business to VAT register in other EU member states if they supply these types of services within other EU member states. If the business provides goods / services that are not TOMS supplies, it may be required to VAT register in the EU member state where the goods / services are supplied. The precise VAT treatment will depend on the nature of the goods / services supplies. Further details can be found in the International Transactions topic.

Businesses who make the types of supplies listed below must use TOMS in order to account for any VAT due.

Businesses selling a margin scheme package are treated as making a single supply of services from a VAT perspective.

Supplies outside the scope of UK TOMS

Since 1 January 2010 TOMS will not apply to the following types of transactions:

  • supplies made by a disclosed intermediary / agent where

More on Margin schemes: