TOMS VAT
In short: under TOMS you only pay VAT on your margin, which is what the customer paid you minus what you paid for the hotels, flights and other travel you bought in. For travel enjoyed in the UK, the VAT is one-sixth of that margin. Travel enjoyed outside the UK is zero-rated, and you can't reclaim the VAT on the travel you bought in. OneSixth works this out each period, handles the departure-date rule and produces the year-end adjustment, all linked to your ledger.
TOMS is compulsory for any business that buys in travel and resells it in its own name, not just tour operators. That includes conference organisers, event and wedding planners, and management companies. TOMS VAT usually goes wrong in three places. VAT is due when the customer travels, not when they book. During the year you pay a provisional amount. At year-end you must work out the real figure and adjust. Most accounting software only holds one date per sale and has no idea of a provisional margin, so the work ends up in a spreadsheet.
The Tour Operators' Margin Scheme is a compulsory VAT scheme for businesses that buy in travel services (accommodation, transport, car hire) and resell them as principal or undisclosed agent. If you resell travel you bought in your own name, you're likely in TOMS whatever you call yourself — including conference, event and wedding organisers who bundle travel into what they sell.
VAT is due on your margin — selling price less the bought-in cost of the travel — not on the full sale. At the 20% rate the VAT is one-sixth of the margin, and you can't reclaim input VAT on the bought-in travel; it's absorbed into cost. OneSixth calculates the margin percentage, applies it provisionally each quarter, and reconciles it at year-end.
The VAT point under TOMS is departure — VAT becomes due when the customer travels, often months after booking and payment. Because standard ledgers hold only one transaction date, that gap is the root of most TOMS workflow problems. OneSixth tracks departure so revenue lands in the correct VAT period.
Since 1 January 2021 the margin on travel enjoyed outside the UK is zero-rated, while UK travel stays standard-rated under TOMS. Mixed sellers must split the margin between the two — OneSixth handles the split and posts the correct output VAT codes so your return is right.
OneSixth reads bookings and bought-in travel costs from your connected ledger and organises them by departure date.
The provisional margin percentage is applied each period and posted as a reviewable journal — no spreadsheet in the middle.
At year-end OneSixth recalculates the actual margin, sets next year's provisional percentage, and posts the annual adjustment.
OneSixth connects to Xero, QuickBooks Online, Sage and FreeAgent — it calculates the VAT and posts a reviewable journal, it doesn't replace your accounting system.
TOMS is mandatory for any business that buys in travel services (accommodation, transport, car hire) and resells them in its own name as principal or undisclosed agent — not just tour operators. It catches conference organisers, event and wedding planners, and management companies.
VAT is due on your margin — selling price less the bought-in cost of the travel — not on the full sale. At the 20% rate the VAT is one-sixth of the margin, and you can't reclaim input VAT on the bought-in travel; it's absorbed into cost.
Departure. VAT becomes due when the customer travels, often months after booking and payment — and because standard ledgers hold only one transaction date, that gap is the root of most TOMS workflow problems.
Since 1 January 2021 the margin on travel enjoyed outside the UK is zero-rated, while UK travel stays standard-rated under TOMS; mixed sellers must split the margin between the two.
No — none of the major cloud platforms calculate the TOMS margin or the year-end adjustment natively. The standard route is custom tax codes plus a spreadsheet with a manual journal. OneSixth runs the calculation alongside the ledger instead.