The Tour Operators’ Margin Scheme must be one of the most flawed pieces of tax legislation around.
If you remember, right at the beginning we had the enormous battle with the Government in order to convince them that we operators who did not have an in-house supplier were at a disadvantage to the larger operators who owned their own airlines. Do you also remember, at that time, both Thomson and Airtours remained initially tight-lipped about the advantage they were about to derive from this terribly complicated tax?
As most of us know, the Customs and Excise staff themselves don’t really understand TOMS and I doubt that anyone, except for TOMS VAT consultant Martin Pooley, really understands what it’s all about (so, if you’re confused, ask him!). For most of us, it’s adding a few numbers together, deducting the number you first thought of, adding your grandmother’s age and then applying a formula last used doing O level maths.
The only beneficiaries are our auditors who get another set of fees for auditing an absolutely unnecessary extra transport company we’ve all had to set up.
The latest twist is destined to make our lives even more complicated. When I saw those headlines saying we were all going to get back millions, my heart missed a beat until I began to think of what we would have to do to earn this windfall.
I assume we would have to know by how much agents have been discounting our holidays over the last so many years. Well, I haven’t a clue. I suppose if I owned Lunn Poly I could find out from it but even then how on earth can Thomson find out by how much its retail arm has been discounting its in-house holidays over the years? We could argue that, if the commission being paid by the tour operator is 10%, the retailer would have given half his commission away. Of course, this is more likely to have been the case if the commission was 20%.
So let’s say we make a rough calculation and bang in a claim. How likely is Customs and Excise to accept our figures? There is no doubt it owes all of us some money back but how much? If we are lucky, they will accept our estimate because no operator can accurately calculate what is due as a rebate from Customs and Excise. But when it comes to new bookings, will they still accept an estimate? Here the vertically integrated are at a distinct advantage because they will, from now on, know exactly the retail discount of that portion of their holidays sold through their own outlets. And the rest of us? Would the independent retailers we deal with tell us by how much they have discounted our holidays? Even if they were prepared to tell us (which I doubt), how would we have to alter our own documentation? And is it worth it?
Why is life becoming so complicated? We seem to do nothing else but fill in forms and rush around trying to comply with new legislation which the Government throws constantly at us. The UK is getting to be like a police state. Big Brother is certainly watching us now. All this complicated legislation will drive small and medium-sized enterprises to the wall and leave the way clear for the multinationals.