The Tour Operators' Margin Scheme is set to become compulsory next year, and could drive corporates to book accommodation and travel directly, cutting out third parties and VAT. With time tight before the proposed changes become law, C&IT sets out the fundamentals of this VAT legislation, its potential impacts and what those affected can do to fight back.
What is TOMS?
The Tour Operators' Margin Scheme is a European scheme applied in nearly all EU member states. It is designed to simplify VAT regulations, 'relieving' many suppliers of travel services of VAT obligations. However, suppliers can opt out if they can demonstrate they are paying VAT under normal rules. This allows a VAT invoice to be raised, which the corporate client can use to claim 15% of their event accommodation and travel spend back. TOMS does not apply just to specific tour operators, but rather must be used by any business supplying travel in its designated circumstances.
What is the industry doing?
Eventia is leading the charge on this. It's been working with TOMS expert David Bennett from chartered accountants Saffery Champness, which has also been advising ABTA and ETOA.
The association subsequently compiled a briefing document for members and put a consultation process into place last month. This asked members for feedback, specifically on the question as to whether they want to keep business-to-business events outside the TOMS legislation.
"It is vital that event agencies and DMCs provide us with solid factual information on how the proposed changes might impact on their businesses in order to inform and strengthen our feedback to government," says Kirsch.
As C&IT went to press, some 50 members had responded, with the first stage of consultation due to have been completed by the end of March. This is just the start though, Kirsch says, and he urges agencies and DMCs to keep in contact to head off the proposals.
"TOMS is primarily aimed at the consumer travel sector, but of course potentially it has a huge effect on business-to-business travel providers," he says. "Eventia believes ending the TOMS opt-out could have profound effects on the business model and competitiveness of agencies managing events in the UK. But, even if this does become law, it does not need to stay that way."
