Explanation of VAT on Educational Trips

Tour operators are required to pay VAT under the Tour Operators’ Margin Scheme (TOMS); this means tour operators are unable to show VAT as a separate item on invoices and consequently Local Authority schools are unable to claim back VAT on any element. The previous concession whereby schools could claim for some elements on UK tours was revoked on 1/1/2010 by HMRC.

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Brief outline of TOMS

This is a VAT accounting scheme for tour operators and other travel service providers based in the EU. The UK version adopted since it exited from the EU continues the principles of the EU Version.

Under the normal VAT rules, those businesses buying and selling various elements of their travel packages in different Member States would be liable to register and account for VAT in each of the Member States concerned. The scheme enables tour operators to register in just the Member State in which they are established, rather than in all Member States where they provide travel services.

The supply of a travel package is treated as a single supply taxable at the standard rate of VAT, and operators account for VAT on their profit margin in the Member State where they are established, but are prevented from recovering input tax incurred on scheme purchases.