We have come across a number of cases recently where clients have found themselves having to account for VAT under the Tour Operators’ Margin Scheme (TOMS). At first glance, none of the businesses concerned look like tour operators.
- A private-sector provider of sports coaching who runs residential courses
- A software development company which ran a marketing event for an overseas associate company
- A company which promotes and hosts music festivals.
Where TOMS applies, it is not optional and all of the above businesses have had to apply the margin scheme.
In some cases, the effect has put them in a better position than they would have been under ‘normal’ VAT accounting. However, the calculations required under TOMS are complex and detailed.
Broadly, TOMS applies to any business that provides accommodation, passenger transport and certain other services for the benefit of a ‘traveller’.
If you buy in any of these supplies for resale to travellers, it is likely that you will have a requirement to account for VAT under TOMS. If in doubt, check it out!