HMRC have just announced their plans for VAT and travel in the event of a no deal Brexit.
HMRC’s overall intention is to maintain the current rules and guidance to the greatest extent possible. A new UK version of TOMS is proposed and the rules for services falling outside TOMS will stay as they are.
What the new position would mean for each business depends on the nature of the business conducted. It is appropriate to consider the implications for three broad sectors: tour operators (i.e. anyone selling travel on a B2C basis and in their own name), wholesale suppliers of travel and the business travel and events sectors. For some, what is proposed will be good news whilst others will be disappointed.
It is vital to appreciate, however, that HMRC’s announcement applies only if there is no deal. In any other scenario, the way forward will be different. It is also important that the position described applies upon Brexit but there is no guarantee that the immediate post-Brexit treatment will continue beyond the short term.
We understand that the amendments required to achieve the above are due to be laid before Parliament later this month. We also understand that a revised version of the TOMS public notice will soon be published.

Tour operators

HMRC have decided that TOMS should continue in its current form in all respects – bar one. This one change is very significant: whereas the margin made on all EU travel is currently standard rated, in the future only the margin on UK travel will be subject to VAT. The margin on all travel enjoyed outside the UK will be zero rated.
For many, this will mean a significant fall in UK VAT payable. Indeed, tour operators selling holidays wholly outside the UK will (technically) still be within TOMS but will not pay any UK VAT. The treatment of holidays in the UK will remain as now.
The treatment of the margin is the only proposed change. All other aspects of TOMS will remain as now. This means, amongst other things, that wholesale supplies will still fall outside of TOMS, thereby facilitating the continuation of the transport company mitigation scheme (although clearly the benefit of the scheme will be limited to travel within the UK).
Transitional measures will be needed to manage the change in the taxation of the margin.
However, whilst the above all sounds positive, it must be remembered that this would be a new UK version of TOMS which would provide no protection against any need to pay VAT in other member states. It may be that some or all of the EU27 would expect the payment of VAT.
We understand that non-UK tour operators selling UK travel on a B2C basis will not be expected to pay UK VAT (and will not be entitled to any recovery of UK VAT).


As above, the new UK TOMS will not apply to wholesale supplies. HMRC have confirmed that the current application of VAT to standalone products and packages will continue.
The above will apply regardless of the ultimate use to be made of the services being wholesaled. In other words, the current treatment applies to wholesale supplies of leisure travel, business travel and services for the events sector.
At the moment, following the CJEU decisions of 2013 there is an option to use TOMS for wholesale supplies. We understand that this option is being withdrawn so that all wholesale supplies made in the UK will fall outside of TOMS (TBC).
Again, this approach will be welcomed by many in the wholesale sector. However, those wholesalers supplying travel enjoyed in the EU27, just as described for tour operators above, may find there is a requirement to pay VAT in the other member state(s) involved.
Whilst foreign tour operators selling on a B2C basis will not be required to pay UK VAT, we understand that overseas wholesale suppliers will continue to be subject to the same payment obligations and recovery opportunities as UK suppliers.

Business travel and events

The treatment of B2B supplies for the customer’s own use will continue to fall within TOMS, albeit, as above, that UK VAT will only be payable on the UK margin.
Many in the business travel sector currently ensure they fall outside of TOMS by the use of agency models. This will no doubt remain a popular means by which the harmful effects of TOMS are avoided. Any business agent selling otherwise than in a disclosed agency capacity will continue to be subject to TOMS VAT on the travel used within the UK but the margin on such services enjoyed in the EU27 will be zero rated. Once again, however, such a business may be faced with a need to pay VAT in other member states.
We understand that a business agent established outside the UK and selling in his own name will be not liable to pay the UK TOMS VAT.
In the circumstances in which HMRC currently thinks that events must be included in TOMS, TOMS will continue. The events sector will we expect be disappointed about this. It is true that the margin made on events in the EU27 will become zero rated but TOMS will continue to be a significant issue when organising UK events. Disclosed agency will no doubt remain popular. The need to split many events between the travel and non-travel components, and to apply differing VAT rules, looks set to continue.
As above, events organisers outside the UK will not be liable to pay the UK TOMS VAT.
Thank you for reading. If you have any questions, please do not hesitate to contact our VAT & TOMS specialists Laura Chipp at or David Bennett at

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