Michaeldon
30th July 2009, 10:24
Hi All
You might remember me because of a mammoth thread on the Tour Operator Margin Scheme last year. In the event your advice was very helpful and saved me some money. Much appreciated. Thank you.
I have a different question now so, TOMS experts, here is my question.
I run a vacation apartments business which has offices in many EU countries including the UK. My goal is to minimize VAT. TOMS has helped with that in some cases.
We work like this: We sign a long lease with an owner and sublet the apartments by the day to tourists. In the UK this means 15% VAT is payable by the tourist. However we've managed to shave some of the VAT off the bill by buying in the accommodation from some landlords without VAT and only charging VAT on our margin to the customer using TOMS.
So my question is this. If the travel agent was incorporated in Gibraltar where there is no VAT could it still use TOMS or an equivalent? The company in Gibraltar would buy in travel inventory and then resell it with a margin. It could not reclaim any VAT on the inputs but would not be liable for VAT on the outputs either. At least that's my interpretation.
EU law says that VAT must be paid in the destination where the property resides except where TOMS is used. So if the Gibraltar company used the TOMS methodology would that make VAT due in Gibraltar and not in the destination?
I am sure in Gibraltar they don't care what you do, but what would the UK tax office say about it?
You might remember me because of a mammoth thread on the Tour Operator Margin Scheme last year. In the event your advice was very helpful and saved me some money. Much appreciated. Thank you.
I have a different question now so, TOMS experts, here is my question.
I run a vacation apartments business which has offices in many EU countries including the UK. My goal is to minimize VAT. TOMS has helped with that in some cases.
We work like this: We sign a long lease with an owner and sublet the apartments by the day to tourists. In the UK this means 15% VAT is payable by the tourist. However we've managed to shave some of the VAT off the bill by buying in the accommodation from some landlords without VAT and only charging VAT on our margin to the customer using TOMS.
So my question is this. If the travel agent was incorporated in Gibraltar where there is no VAT could it still use TOMS or an equivalent? The company in Gibraltar would buy in travel inventory and then resell it with a margin. It could not reclaim any VAT on the inputs but would not be liable for VAT on the outputs either. At least that's my interpretation.
EU law says that VAT must be paid in the destination where the property resides except where TOMS is used. So if the Gibraltar company used the TOMS methodology would that make VAT due in Gibraltar and not in the destination?
I am sure in Gibraltar they don't care what you do, but what would the UK tax office say about it?