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Understanding TOMS with SilverDoor Managing Director, Marcus Angell

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Back to basics was the theme for this year’s HBAA forum, which took place at the Hinckley Island hotel on 7th and 8th of July.

The annual members-only event brings together key speakers and industry professionals for a series of discussions and panel debates on current issues facing the events and hospitality sector.

Integral to this year’s theme was the evolution of meeting technology, traveller safety, and the importance placed on brand when choosing accommodation.

SilverDoor Managing Director Marcus Angell was tasked with shedding some light on one of the forum’s most challenging topics: the Tour Operators Margin Scheme or TOMS as its better known.

“TOMS is a sales tax standardisation scheme designed to standardise the process of reclaiming VAT throughout the EU.”

“It does this by allowing tour operators to account for VAT on their year-end business profit margins, rather than on each individual sale in each member state,” said Marcus.

He added: “For the purposes of discussion, a tour operator is defined as any agent company that sells travel or accommodation. So, if you are here at the HBAA Forum on behalf of a company that sells any form of accommodation or as an agent to another company, anywhere within the EU, then TOMS applies to you.”

The key issue of commercial concern for TOMS is the fact that being within the scheme prevents an agent from producing their own VAT invoices. As a knock-on effect, UK clients are unable reclaim VAT on their accommodation costs, making their stay in a serviced apartment or hotel much more expensive.

Illustrating how the scheme works, Marcus was joined on-stage by fellow SilverDoor employees, Stuart Winstone (Commercial Director), Caroline Saunders (Head of Marketing) and Claire Stevens (Head of Business Relationships), who played the roles of: UK property, accommodation agent and tax woman. Also accompanying them was Citybase Apartments Operations Director Imogen Bretten – now in partnership with SilverDoor following the recent acquisition.

As corporate traveller in the group role-play, Imogen was shown to make a saving of £200 in VAT on an accommodation booking of £1,200, as a result of Claire, the accommodation agent, operating outside of TOMS. 

However, in the same transaction inside the scheme, Imogen was left £200 worse off - reason being because Claire, under TOMS, can only issue her a non-VAT invoice.  As a result, Imogen’s company are minus a legitimate tax invoice when they come to completing their HMRC VAT tax return.

But surely Claire can’t just opt out TOMS you ask? Truth is the EU ruled it illegal to do so in 2010. There does exist, however, a HMRC approved method for getting around it, as Marcus explained. Essentially, rather than issuing Imogen a VAT invoice directly from her own agent company - and  thereby operating as a ‘disclosed agent’ within TOMS – Claire can instead pass on a property invoice from the hotel or serviced apartment itself as a payment request.  Now when Imogen’s company completes its tax return, she has a legitimate payment request from which to submit a £200 VAT reclaim.

TOMS will be chewed over in greater length by the HBAA in two further sessions on the 22nd September. Further details will follow in the coming weeks. 

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