TOMS calculations

Produced by Tolley
TOMS calculations

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

  • TOMS calculations
  • What records must be kept?
  • What are the market value calculations and cost-based calculations?
  • Simplified calculation
  • Completing the year-end calculation
  • Can you have separate calculations for EU and non-EU supplies?
  • How is VAT accounted for during the financial year?
  • How is the selling price calculated?
  • How do you calculate the ‘market value’?
  • How do you work out the purchase price of margin scheme supplies?
  • More...

This guidance note provides an overview of the two TOMS calculations that can be undertaken by a business that makes ‘margin scheme’ supplies. This note should be read in conjunction with the Tour Operators Margin Scheme (TOMS) ― overview, Operating TOMS and TOMS ― step by step guide to completing the calculations guidance notes.

This guidance note has not been updated with details of the temporary reduced rate. Please see the TOMS calculations ― reduced rate supplies (15 July 2020 to 31 March 2021) guidance note for details of the additional steps that need to be undertaken when undertaking the TOMS calculation.

What records must be kept?

Businesses using TOMS need to keep the following records:

  1. market value calculation:

    1. a record of the market value of each in-house supply made

    2. supporting evidence explaining how the market value was calculated

  2. full or simplified calculation which requires a:

    1. record of the total selling price for all margin scheme supplies / packages

    2. separate record of the direct costs associated with all margin scheme supplies included in the package, including:

      1. standard-rated and zero-rated margin scheme supplies

      2. standard-rated, zero-rated, exempt and outside the scope in-house supplies

      3. standard-rated, zero-rated, exempt and outside the scope agency supplies where the commission received is readily identifiable

      4. reduced-rated in-house supplies for the period 15 July 2020 to 31 March 2021

Notice 709/5, para 5.6

What are the market value calculations and cost-based calculations?

There are two TOMS calculations that can be used by businesses:

  1. market value calculation ― the market value calculation is set out in the market value calculation (annual adjustment) below and works on the basis of extracting the market value of in-house supplies from the full package price. This is done by deducting the market value of in-house supplies from the full package price, leaving the selling value of the bought in margin scheme supplies on which a margin is then calculated using the formula set out in the cost-based calculation (annual adjustment) below. If the

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