ABTA is fighting in Brussels to prevent proposals for a reform of the Tour Operators’ Margin Scheme [TOMS] VAT arrangements which could have a very damaging impact on Members’ businesses. The Belgian Presidency of the EU is working on a redraft of TOMS and ABTA has submitted a report that would address competitive disadvantages and distortions in the current scheme and prevent potentially damaging anomalies in the Presidency’s new proposals.

ABTA is leading an alliance on TOMS reform in conjunction with the European Tour Operators Association, Eventia, Hotel Booking Agents Association, Guild of Travel Management Companies.

Mike Monk, ABTA Head of Finance said: “Changes to schemes such as TOMS can often slip under Members’ radar but their importance would be hard to over emphasise. Over the years TOMS has been mostly of great benefit to agents and operators.

It would be fair to say that there have always been anomalies in the scheme which created competitive distortions but these proposals put at risk substantial parts of Members’ businesses. This reform process gives us the perfect opportunity to remove them.

However, the Belgian Presidency’s proposals run the very real risk of creating even more highly damaging discrepancies which would have a significant impact on our Members’ businesses. We have already taken our argument to the Treasury which was definitely in listening mode on our TOMS position and we are hopeful that the Commission will give a sympathetic ear to our recommendations”.

ABTA has recommended that TOMS should:

• Be harmonised throughout the EU
• Be fair for both businesses established in the EU and competitors trading outside the EU removing competitive distortions
• Allow the recovery of input VAT on travel costs incurred for business purposes
• Support the promotion of EU tourism
• Not discriminate against travel businesses established in the EU

David Bennett, Travel VAT Partner at Saffery Champness who are advising ABTA added: “There is a good case for reform but the current proposals would make things worse and the effects would be felt by many parts of the travel industry.  For example, those selling travel to business customers could be hugely disadvantaged.  Also, for others the costs of compliance would increase dramatically.  In short, the proposals are harmful for UK businesses and for the UK as a destination”.