What is TOMS?

If you’re wondering who on earth TOM is and what he has to do with VAT, then you’re not alone…

TOMS stands for Tour Operators Margin Scheme – a scheme designed to help simplify VAT for tour operators. It has been around for a few years and previously the HMRC allowed most event agencies to opt out of it, but that is changing from 1st January 2010.

The bad news…

If Chillisauce supplies a package or an event that is within TOMS, then the client can’t reclaim the VAT element
which in turn makes their event more expensive and the whole process more complicated for everyone.

The good news…

The brains behind Chillisauce weren’t too keen on the thought of the bad news part, so they put their thinking caps
on and worked out a simple and legal way around TOMS.

The niggly parts about TOMS…

If the event includes any of the following elements then TOMS applies to the whole event;

• Accommodation
• passenger transport
• transport hire
• trips or excursions
• the service of tour guides
• special use of lounges at an airport

Therefore, if a client books an event with overnight accommodation and activities then the event would be 17.5%
more expensive than usual as the client would no longer be able to claim back VAT on our invoice. Unless the
client has thought of a way around it like Chillisauce did…

How Chillisauce can avoid TOMS and save you money…

If Chillisauce act as a disclosed agent for the element that makes the booking a TOMS booking (accommodation
for example), then the whole booking will then not be a TOMS booking and VAT will still apply but can be
reclaimed as usual.

This means that the contract with the relevant supplier (hotel in this case) would need to be in the clients name,
signed by the client with clear invoices that show that Chillisauce are the disclosed agent for this element.
Chillisauce can still manage the venue, organisation and payments of these TOMS elements, but the Client and
hotel need to have a direct contractual relationship, therefore implementing cancellation terms etc.

And it’s as easy as that…