CUSTOMS has published a consultation document on changes to the TourOperators’ Margin Schemefollowing the European Court of Justice decision in Madgett andBaldwin.
The consultationdocument plays down the implications but is welcome nonetheless.
The European Court of Justice said two things:
1) It clarified who should be in TOMS. As a result a small number of businesses on the periphery of TOMS may be able to leave TOMSand revert to normal VATrules.
2) It said that in-housesupplies should be taxed on market values rather than on the cost plus basis used by TOMS. Most tour operators do not make in-house supplies and are not affected.
The main beneficiaries of this decision are coachowners who sell tours.
Their zero-rated in-house transport is undervalued by TOMS.
They should pay less tax in future and make repayment claims for the past.
There is a three-year time limit on repayment claims so delay counts against them.
A smaller category ofbeneficiaries will be theoperators who make non-UK in-house supplies eg byoperating ski chalets or camp sites on the Continent.
They should also make repayment claims.
There will be losers too.¼Some operators makingin-house supplies would pay more tax under marketvalues, eg. operators who own UKhotels.
Martin Pooley FCA
TOMS VATconsultant
Norwich