Q. My purchaser is a travel agent running for the corporate region, reserving hotels for a group of workers – especially income reps traveling around the United Kingdom. Although she has booked the motel inside the call of the enterprise, naming the guest, and the visitor glaringly is aware of the lodge information, the inn invoices her. Because she then invoices on to the enterprise in her own call, does this imply she has to use the Tour Operators’ Margin Scheme (TOMS)?
A. A tour agent performing as main, or as an undisclosed agent receiving and issuing invoices for the accommodation in their personal name, could typically use TOMS. This would mean the agent no longer being able to get better input tax at the lodge, and the VAT is accounted for by them at the margin. The VAT at the resort, in the rate charged on via the agent, would then be sticking tax for the business consumer.
However, if a journey agent acts as a disclosed agent and complies with the preparations agreed between HMRC and the travel industry they could apply the ‘lodge bill back’ rules posted by way of HMRC in Brief 21/2010. These are reproduced under. This avoids the need to use TOMS.
The agreed arrangements are:
Invoices from resorts might be addressed c/o the hotel booking agent for the price (This is to signify that the invoice has been issued to the resort reserving agent in its ability as an agent);
The reserving subject on the lodge bill will identify the motel guest, their company and could preferably convey a completely unique reference wide variety (Until hotels can address their invoices without delay to their commercial enterprise clients, it is able to be vital for motel booking sellers to enter a corporation identification number at the bill);
The resort booking agent will set up for the price of the bill(s) but will now not recover the enter tax thereon;
The resort booking agent will ship the customer a price request/declaration of the expenditure incurred by using the motel reserving agent on its behalf, one after the other identifying the fee of its substances, VAT, and so forth;
The charge request/announcement should say something along the traces of “The VAT has proven is your enter tax which can be reclaimed difficulty to the everyday regulations”;
The purchaser will use the fee request/declaration as a foundation for his or her input tax reclaim;
The lodge booking agent will preserve the original lodge invoices and these might be made available if proof of entitlement is needed by VAT group of workers;
The lodge booking agent will ship a VAT bill for its personal services, plus the VAT. This can be consolidated with the announcement of lodge fees, or it can be a separate document; and
The inn reserving agent will price its consumer the precise amount charged via the bill back provider, as a disbursement.
About the writer
Vivienne Scott is senior VAT consultant at Croner Taxwise. Vivienne has worked in VAT considering 1989, whilst she joined HMRC as an assurance officer. Before becoming a member of the team as a representative in 2000, she had spent 5 years coping with written and cellphone inquiries at a neighborhood VAT office.
In 2007/ 2008, she spent a year with the main accountancy company gaining revel in of VAT from a unique attitude and growing capabilities which are applicable to her modern position.
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