New Forest

17/12/2019

Tour Operators Scheme Update

The tour operators’ margin scheme guidance has been updated to reflect the correct way to work out the selling price of Tour Operators Margin Scheme (TOMS) supplies.

Guidance (VAT notice 709/5) details in paragraph 6.1 what the selling price should include:

  • ‘The total VAT-inclusive selling price of all your Margin Scheme supplies – if you make a charge for payment by credit card this is also part of your total selling price and must be included in this total
  • The total VAT-inclusive selling price of any in-house supplies which you have supplied together with Margin Scheme supplies
  • Amounts received relating to any supplies, packaged with Margin Scheme supplies which you arrange as an agent, if your commission is not readily identified
  • Forfeited deposits and cancellation fees received from customers who cancel bookings where these exceed 20% of the agreed price, when totalled, if you use method 2 to calculate tax points
  • If you sell through an agent, the full amount paid by, or on account of the customer (event if the agent deducts a commission and you receive only the balance) – if the agent grants a discount to the customer and makes good this discount, your selling price is the amount paid by the customer plus the ‘top up’ amount added by the agent.’

The selling price should not include:

  • ‘Any refunds made to customers for unsatisfactory service
  • The value of any packages of supplies which do not include any Margin Scheme supplies – you should account for VAT on these in the normal way
  • Amounts collected by you as an agent, if your commission is readily identified
  • Any discount you agree with your customer
  • Forfeited deposits and cancellation fees received from customers who cancel bookings if you use the method 1 to calculate tax points, or you use method 2 and have received 20% or less of the agreed price.’

For more information on the guidance, please visit the government website (https://www.gov.uk/guidance/tour-operators-margin-scheme-for-vat-notice-7095) or contact Alan Rolfe on 023 8046 1200.

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