VAT – Tour Operators’ Margin Scheme
HMRC have published a new business brief relevant to tour operators and other businesses that provide travel services. The brief refers to a specific piece of VAT legislation known as the Tour Operators’ Margin Scheme (TOMS).
TOMS is a special scheme which allows businesses to avoid needing to register for VAT in each EU jurisdiction where they provide travel services and packages. Using the scheme the supply of qualifying travel is taxable at the standard rate. The tour operators account for VAT on their profit margin in the EU country where they are based.
Following a consultation period, HMRC agreed to amend TOMS to fully comply with EU law. The new Revenue & Customs Brief 74/09 sets out the transitional arrangements which will apply to supplies which straddle the old and new rules which will take effect from 1 January 2010.