Last month HMRC issued Revenue and Customs Brief 13 (2018) outlining changes to the VAT treatment of retained payments and deposits. For travel organisers using the Tour Operators Margin Scheme (“TOMS”) this will mean that from 1 March 2019 cancellation income cannot be isolated from the TOMS calculation as currently.
Of additional interest is the Statutory Instrument 2019 No. 73 laid before the House of Commons on 22 January 2019. This reflects that in the event of a “no deal Brexit” the TOMS margin on EU destination holidays will become zero-rated for UK VAT purposes. The longer term outlook is that these could remain zero-rated after a transition period in the event of a “soft Brexit”. While the short term outlook for travel organisers within TOMS is a reduced UK VAT liability, which is positive news, there is sadly uncertainty around whether UK travel companies would then have to register for VAT in the EU market destination countries. This also raises the question of other EU established businesses similarly being required to register for VAT in the UK in relation to inbound tours. One hopes there is a “deal to be done here”. Watch this space!
Statutory Instrument 2019 No. 73