Tour Operators Margin Scheme (TOMS) ― operating the scheme

Produced by a Tolley Value Added Tax expert

Value Added Tax

Guidance

This guidance note examines the operation of the Tour Operators Margin Scheme (TOMS), including methods of calculating and accounting for VAT and other related operational issues.

For an overview of the TOMS more broadly, see the Tour Operators Margin Scheme (TOMS) ― overview guidance note.

For more in-depth commentary on methods of calculation under the TOMS, see De Voil Indirect Tax Service V3.593.

How is VAT calculated and accounted for under the TOMS?

During a year, VAT under the TOMS is provisionally accounted for in each VAT return by applying provisional percentages worked out during a previous year-end TOMS calculation to net sales figures. If the business has just started to use the TOMS (and has therefore been no year-end calculation) then it has to work out a provisional percentage in a reasonable way, possibly using previous trading figures, projections, etc.

A business must then perform a year-end calculation of VAT due under the TOMS immediately after its financial year-end. Having performed this calculation, it must account for the difference

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