TOMS calculations ― reduced rate supplies (15 July 2020 to 31 March 2021)

Produced by Tolley
TOMS calculations ― reduced rate supplies (15 July 2020 to 31 March 2021)

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

  • TOMS calculations ― reduced rate supplies (15 July 2020 to 31 March 2021)
  • Market value calculation (annual adjustment)
  • Cost-based calculation (annual adjustment)
  • Accounting for VAT on the provisional value of margin scheme supplies

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 details of the TOMS calculations that are required whilst the reduced rate applies to supplies covered by the TOMS. This guidance note should be read in conjunction with the following notes:

  1. Hospitality industry ― temporary reduced rate from 15 July 2020 to 31 March 2021

  2. Tour Operators Margin Scheme (TOMS) ― overview

  3. Operating TOMS

  4. TOMS and in-house supplies

  5. TOMS calculations

There is no change to the simplified calculations as they can only be used in respect of standard-rated supplies. Businesses that make supplies at the reduced rate, zero rate or outside the scope of VAT cannot use this calculation.

Market value calculation (annual adjustment)

These tables have been extracted from HMRC Notice 709/5.

Note: Only use this section if the business has packages or parts of packages being apportioned by the market value of the in-house element of the package. On completion of all the steps M1–M5, the steps in the cost-based calculation below must be followed, taking forward the figures from this section as instructed:

StepAction required
Calculate the value of sales of Margin Scheme packages
M1Total the VAT-inclusive selling prices of all your in-house Margin Scheme packages supplied during the financial year including any that are not ‘market value’ packages
Working out the market value
M2Total the VAT inclusive market value of the standard-rated in-house supplies at M1: carry forward this figure to step 21 of cost-based calculation below
M2.5Total the VAT inclusive market value of the reduced-rated in-house supplies at M1: carry forwar

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