ABTA works with government to confirm that VAT will be zero rated
HMRC has confirmed that once the transition period ends on January 1, 2021, the VAT charged on holidays through the Tour Operator Margin Scheme (TOMS) on travel outside of the UK will be zero rated.
The announcement comes after discussions between ABTA and HMRC and removes a crucial area of uncertainty for many travel businesses.
It has been agreed by HMRC on the assumption of a possible no deal with the EU on TOMS.
In the event of a no deal being reached with the EU on TOMS, a new UK version will be introduced which will require payment of TOMS VAT only on UK holidays but not on package holidays within the EU.
A Guidance Note for ABTA Members has been agreed with HMRC, which provides further information and details in respect of transitional issues, which is available on the Member Zone at https://www.abta.com/vat-
Carolyn Watson ABTA’s director of finance and operations said: “The confirmation by HMRC that post Brexit packages within the EU will be zero rated for TOMS is great news for many of our Members.
“We were pleased to be able to work closely with HMRC on this important matter and I thank HMRC for its understanding of how serious this issue is for many travel companies and its action to remove this area of uncertainty. This will greatly assist Members as they look to rebuild travel with our most important holiday destinations, the majority of which are within the EU.
“However, I would stress that one area of uncertainty still remains; in the longer term the possible need to register for VAT purposes within individual EU state. We will let Members know when the position on this becomes clearer.”