Opinion
Numerous businesses involved with the organisation of events do not realise that the compulsory new Tour Operators Margin Scheme rules apply to them
Business to Business transactions now within TOMS
HM Revenue & Customs (HMRC) amended the Tour Operators Margin Scheme (TOMS) legislation from 1 January 2010 to bring it into line with EU requirements. 3 years after the change we are aware that a number of businesses involved with the organisation of events and conferences may not have appreciated that these new rules apply to their supplies to other businesses or that the application of the TOMS to their activities is compulsory.
What is TOMS and how do I comply?
TOMS is a special VAT scheme that applies to businesses that buy-in and re-sell accommodation, transport, event tickets, and certain other services as a package. This can include supplies of events and conferences organised by those not normally regarded as tour operators. The particular changes remove two concessions and bring supplies made to other businesses for their own use within TOMS.
For the organisers of events and conferences the changes will result in additional VAT costs as input VAT is not recoverable on the purchase of TOMS supplies and VAT cannot be charged on the sale of the package to the business customer; instead it is calculated on the profit margin. Costings for events and conferences will need to be revisited and prices will need to be adjusted to include VAT rather than be charged at a VAT exclusive rate.
Moves by HMRC
We understand that HMRC is aware of the concerns that many events and conference organisers making business-to- business sales have in relation to complying with the new rules. HMRC has introduced certain measures to help mitigate the effect on businesses but these do not suit all business models.
What should I do next?
Having successfully worked on a number of these cases, the specialist VAT team at Smith & Williamson is able to offer a review of your activities to analyse the impact of this change on your business. We can advise on the implementation and operation of TOMS procedures to ensure your business is fully compliant, and suggest ways to mitigate the impact of increased VAT costs. If necessary we can also assist in making a Voluntary Disclosure to HMRC for any underpaid VAT. There is still time to correct the situation in relation to future business as the calculations are dealt with on an annual basis.
Contact us without delay as taking action now could save your business money.
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