HMRC has published Revenue and Customs Business Brief 9/2019 to correct an error in VAT Notice 709/5: Tour operators margin scheme (TOMS) which was amended after changes to the treatment of retained payments and deposits from 1 March 2019.
The update said that tour operators should include all forfeited deposits and cancellation fees in their margin scheme calculations when they should be included only if they exceed 20% of the full sale price.
Philip Munn VAT partner at RSM explains: ‘This difference is a result of a VAT technical point. The TOMS VAT accounting rules allow for a choice between date of departure and occupying the accommodation (method 1) and a method based on when cash amounts (over 20% of the value of the supply) are received (method 2). As method 2 usually results in an earlier tax point and method 1 is better aligned to how businesses...
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