Value Added Tax

Tour Operators Margin Scheme (TOMS) ― supplies covered by the scheme

Produced by Tolley
  • 03 Dec 2021 11:50

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

  • Tour Operators Margin Scheme (TOMS) ― supplies covered by the scheme
  • When are supplies covered by the TOMS?
  • What is a tour operator for the purposes of the TOMS?
  • Is the supply by a tour operator with a UK establishment?
  • Are the services acquired / bought in by the tour operator for the purposes of its business?
  • Are the services supplied without material alteration or further processing and for the benefit of a traveller?
  • Wholesale supplies
  • Are the supplies incidental for TOMS purposes?
  • Practical points

Tour Operators Margin Scheme (TOMS) ― supplies covered by the scheme

This guidance note examines when supplies are covered by the Tour Operators Margin Scheme (the TOMS).

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

For in-depth commentary on the legislation and case law, see De Voil Indirect Tax Service V3.591–V3.594.

When are supplies covered by the TOMS?

The TOMS applies to supplies of what are known as ‘designated travel services’. HMRC sometimes also refers to these as ‘margin scheme supplies’.

A service is a designated travel service when it meets all of the following criteria:

  1. it is supplied by a tour operator

  2. the tour operator has a business establishment or a fixed establishment in the UK

  3. it is acquired by the tour operator for the purposes of its business (rather than being an ‘in-house’ supply)

  4. it is supplied without material alteration or further processing and for the benefit of a traveller

SI 1987/1806, Art 3; Notice 709/5, para 2.7

There is an exception for ‘incidental supplies’ which, subject to meeting certain conditions, can either be treated either within or outside the TOMS.

When several designated travel services are packaged together as part of a single transaction, this is treated as a single supply for VAT purposes. For single and multiple supplies, see the Single or multiple supplies ― overview guidance note.

A business may engage in a single transaction which includes both designated travel services and other services (such as an in-house or agency

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