The guidance around the (TOMS) Tour Operators Margin Scheme (VAT Notice 709/5) improved, including Paragraph 6.1, which details how to work out the selling price under the Tour Operators Margin Scheme.
TOMS states that the selling price includes:
- Total VAT-inclusive selling price of all your margin scheme supplies. Even payments via credit card are part of your total selling price.
- The totals VAT-inclusive selling price of any in-house supplies which you have supplied together with margin scheme supplies.
- Receiving amounts relating to any supplies, package with margin scheme supplies which you arrange as an agent. That’s when you don’t recognize your commissions.
- Receive forfeited deposits and cancellation fees from customers. They cancel bookings where these exceed 20% of the agreed price. When totaled, you can use method 2 to calculate your tax points.
- The full amount paid by, or on account of, the customer (even if the agent deducts a commission and you receive only the balance). If the agent grants a discount to the customer, your selling price is the amount paid by the customer plus the ‘top-up’ amount added by the agent.
TOMS 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. These are the 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 that you’ve agreed upon by the customer.
- Forfeited deposits and cancellation fees received from customers who cancel bookings if you use method 1 to calculate tax points, or you use method 2 and have received 20% or less of the agreed price.
If your business falls under TOMS, Please get in touch with ACCOTAX – TOMS Accountants