Travel VAT and the Tour Operators’ Margin Scheme (TOMS)

TOMS Accountants : Elman Wall Limited

A business’ VAT position can often be key to its profitability. In the travel industry, the VAT rules can be particularly complex and frequently changing, often meaning it is difficult to keep track, and to ensure VAT efficiency.


The Tour Operators’ Margin Scheme (TOMS) applies to businesses that buy-in and re-sell travel, accommodation and certain other services as principal or undisclosed agent. Where TOMS applies, input VAT is irrecoverable on direct costs, and output VAT is payable on the margin made on EU sales. Although in some cases this scheme is a simplification, in many other cases it means an added degree of complexity in understanding the rules and calculating VAT due accurately. Crucially, the application of TOMS can also mean a reduction in a business’ margin made on sales.

At Elman Wall we have many years of experience with the TOMS rules and know how important the correct application of TOMS is for your business. Where TOMS is a complication or a cost, we look to reach a better outcome either within TOMS (for example, considering the transport company scheme, or optimising a business’ in-house split), or in some cases outside of TOMS altogether.

Other travel VAT issues

We understand that businesses within the travel industry are concerned about more than just TOMS and have had much experience advising on other common industry issues such as the merits of agency vs principal, input VAT recovery, the VAT place of supply, agency billback and VAT on credit card fees.

Our expert travel VAT advisors Laura Chipp and David Bennett work closely with our accounts & audit team, who oversee TOMS reporting for over 200+ travel businesses, and will be happy to guide you through the maze that can be travel VAT.

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