Two new EU regulations that came into effect on January 1 have forced travel operators and agents to reevaluate their VAT responsibilities.
One of the two significant alterations concerns the Tour Operators’ Margin Scheme (TOMS), opting for which was pro-choice earlier and which has now been deemed mandatory.
A VAT invoice must also be issued against an overseas supplier by agents who deal with them directly. Agents should reveal the commissions earned from each supplier every quarter. Also, sub-agents would have to charge overseas hotels with UK VAT on their commission from bed banks.
Fines would be inflicted on those travel companies that do not adhere to the norms of the regulations.
Grant Thornton VAT Manager, Damon Wright said that an enquiry by Her Majesty’s Revenue and Customs (HMRC) would be held later this year, in this regard. He also urged travel companies to seek advice from a VAT specialist at the earliest and expressed hope that the HMRC would be practical in its evaluation.
David Bennett, Saffery Champness VAT partner, advocated the need for more clarity on the altered VAT rules.
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