There are four changes to TOMS from January 2010, as below. The change of interest to BCH members is

There are four changes to TOMS from January 2010, as below. The change of interest to BCH members is market value for in-house supplies. At present very few coach operators coast plaza hotel will be able to use market value because they do not offer the coach element of the tour in isolation. Perhaps coach operators will start doing so in future? Who knows, it might be good business apart from saving a bit of TOMS? The other three changes, affecting supplies to other businesses, are specialised and will affect few members. For those affected, the lack of transitional provisions may be an issue. Contact Martin Pooley for more details: 01603 662277 or martin@pooley.co.uk 1. If you sell in-house supplies (eg your own coaching) along with bought in supplies (eg hotel accommodation), you are presently required to include the in-house supplies in the TOMS calculation at cost although you only pay TOMS on the margin on the hotels. In future you will be required to take in-house supplies out of the TOMS calculation at market value and use normal VAT rules instead. The change is based on the ECJ decision in MyTravel, who sold package holidays of hotels flights and also sold flight only. THIS ASSUMES you can determine the market value of the in-house supply. Very few coach operators offer the coach element of a tour by itself at present so few members will be affected by this change. The private hire rate for a coach is not comparable with the price of an individual seat and the use of other companies' rates eg National Express was ruled out by the VAT Tribunal in Welsh's Coaches in 2007. This is most unfortunate for the coach sector because it is clear that the cost plus method used by TOMS undervalues the coach element, overstates the margin on hotels and inflates the TOMS liability. Some coach operators already offer a coach only option but it is rare. Perhaps more operators will in future. There are practical questions eg what about the excursions admissions, will the hotels object, is it as feasible for European tours as for UK tours and will anyone buy it? If market value applies it will only make a difference to the TOMS liability if the % margin on the in-house supply is significantly different from the % margin on bought in supplies. Tour operators buying in coaching to go with their own hotels in the UK, for example, could see an increase in their liability, if they sell comparable accommodation by itself. 2. If you sell UK based educational trips to local authorities you should be using normal VAT rules. In future, TOMS will apply so you will not be able to issue a VAT invoice and the local authority will not be able to reclaim the VAT, assuming you buy in the accommodation etc. This will put operators coast plaza hotel who buy in accommodation etc at a disadvantage against operators who have their own sites. 3. If you sell accommodation etc to another operator or business which sells on, your sale is a wholesale supply and normal VAT rules apply, not TOMS. At present HMRC allow you to opt to include wholesale supplies in TOMS. In future you will have to use normal rules. This is very rare. 4. If you sell to another business which does not sell on again (e.g. because they are entertaining clients or sending their staff on a conference), your supply falls under TOMS but HMRC allow you to opt for normal VAT rules. In future you will have to use TOMS. Organisers of UK conferences will be affected because their customers will no longer be able reclaim the VAT unless they change coast plaza hotel the way they contract. Martin Pooley FCA TOMS VAT Consultant 91 Church Lane Norwich NR4 6NY Tel 01603 662277 Fax 01603 618051 Mobile 07831 339720 martin@pooley.co.uk www.pooley.co.uk