Changes to the Toms VAT laws will come into force a month from today as one of the legal consequences of Britain exiting the European Union.
From 1 January, a new UK Tour Operators’ Margin Scheme (Toms) will apply following the UK’s exit from the EU scheme.
Toms applies when a company buys and resells certain travel services, either as a principal or undisclosed agent. It then has to pay VAT on the margin, or the difference between the selling price and the cost of the travel service.
In a client update, Chris Photi, head of travel and leisure at accountants White Hart Associates, said:
“The main change is that the VAT will only need to be paid on UK holidays and UK travel, compared with the whole EU at present.
“Companies that do not sell holidays in the UK will not have to pay Toms VAT because the margin on all forms of travel outside the UK will be zero-rated.
“Apart from this, the new scheme mirrors the existing scheme.”