TOMS calculations ― reduced rate supplies (15 July 2020 to 31 March 2022)

Produced by Tolley

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 2022)
  • Introduction of a new 12.5% reduced rate from 1 October 2021
  • Market value calculation (annual adjustment)
  • Cost-based calculation (annual adjustment)
  • Accounting for VAT on the provisional value of margin scheme supplies

TOMS calculations ― reduced rate supplies (15 July 2020 to 31 March 2022)

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 2022

  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.

Introduction of a new 12.5% reduced rate from 1 October 2021

As announced at Budget 2021, a new 12.5% reduced rate of VAT comes into effect from 1 October 2021 to 31 March 2022 in respect of certain supplies made by the hospitality industry. See the Hospitality industry ― temporary reduced rate from 15 July 2020 to 31 March 2022 guidance note for more information. As a result, additional steps may need to be taken when completing the TOMS calculation to reflect the change in VAT rate from 1 October 2021 (when the reduced rate increases from 5% to 12.5%) and from 1 April 2022 (when the rate increases from 12.5% to 20%).

The calculations below have not been updated to reflect the introduction of the new reduced rate from 1 October 2021.

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

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