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11th April 2014
BACA Welcomes House of Lords Ruling on TOMS
The Baltic Air Charter Association (BACA) has welcomed the 5th March ruling by the House of Lords regarding the liability for VAT under the Tour Operators Margin Scheme (TOMS). The ruling clarifies that Air Charter Brokers shall not be liable for VAT providing there are clear agency contracts in place both ways – with the supplier and customer. For a number of years it has not been clear how the scheme, and VAT liability, applies to air charter brokers.
Some of BACA’s members were targeted by HM Revenue & Customs (HMRC)regarding their possible liability for VAT (under TOMS). A BACA “TOMS task force” was set up, headed by the former BACA Chairman, Dick Gilbert and BACA subsequently had several meetings with the HMRC policy unit in order to firmly put the case across for Air Charter Brokers. BACA presented strong arguments to HMRC that their interpretation of the TOMS legislation was incorrect and against the principles of what TOMS was set up to achieve in the first place.
Following the House of Lords ruling BACA’s guidance to members is quite simple. Continue as you have before. BACA maintains that a declared agent is not liable for TOMS, and this precedent has now been applied by the House of Lords.
Speaking about the developments Tony Coe, Chairman of BACA said “I am very happy with this outcome and welcome this ruling by the House of Lords. The BACA TOMS task force has argued the case strongly for BACA members and this clarifies the position for Brokers. We have been working diligently on this issue and this is a positive development for all Air Charter Brokers and another demonstration of how we act on behalf of our members and brokers.