Until now, agencies managing events that involve any element of the Tour Operators Margin Scheme (TOMS) – anything to do with travel services – meant that the agency had to pay VAT on the full amount of the non-travel part, and VAT-registered clients were unable to recover the VAT.
After 18 months of negotiations between Eventia and HMRC, it will now be possible for agencies to issue VAT invoices on the non-TOMS element of an event - known as In-house supplies - which they were previously unable to do.
Brian Kirsch, chairman of the Eventia Regulation Committee, said: "We are delighted to have reached this milestone agreement with HMRC. It sounds very dull and technical, but this change will be of immediate benefit to agencies wanting to compete in the European market, and who want to account for VAT correctly.
"I am grateful to those agencies who have worked with the Committee, and in particular to David Bennett of Saffery Champness for his expert input."
The Committee continues to work with HMRC on other TOMS issues, including whether minor elements of TOMS in an event can be disregarded, and whether business-to-business transactions should be included in TOMS at all.
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