Insights 17.6.22 Author: Sandy Cochrane

TOMS, admission fees and cultural exemption – Key areas to consider as VAT rate returns to 20% in the hospitality and leisure industry

Insights 17.06.2022 Author: Sandy Cochrane

Many businesses in the leisure and hospitality sector have seen a downturn in income due to travel restrictions as a result of Covid-19. To manage cash flows and ensure VAT has been accounted for correctly, we have highlighted below some useful points to consider for any business within the industry.


Annual adjustments

Many businesses may be due to account for VAT via the Tour Operators Margin Scheme (TOMS) annual adjustment, which is normally required to be done on the VAT return following the year end. For example, if a business has a 31 March year end and its VAT returns are coterminous with that year end, we would expect the TOMS annual adjustment to be calculated and any adjustments needed to be done on the VAT return for the period ended 30 June, for submission end of July/beginning of August.

The TOMS calculations can be complex for anyone, however with the changes of VAT rate that have recently taken place, these will impact the margins calculated under TOMS.  We therefore recommend you seek guidance to ensure the calculations are correct. As a reminder, the VAT rate decreased to 5% in July 2020 until 1 October 2021, when it increased to 12.5% until 31 March 2022. The rate of VAT returned to 20% on 1 April 2022 for all hospitality and leisure businesses. In light of these changes, we recommend that businesses speak to us now, ie June 2022, in order to make sure those readjustments are done correctly, but also to ensure you take advantage of any potential savings.


We have seen, and are continuing to see ongoing disruptions in the travel sector, with many holidays and flights being cancelled. However, cancellation charges are normally deductible from turnover, hence potentially reducing the margin and the subsequent VAT due. Please contact us for a complimentary initial discussion.

Admission fees and cultural exemption

For those businesses in particular for which the cultural exemption applies and therefore,  a partially exempt business, it could also be time to review the partial exemption annual adjustment calculations to ensure that the VAT liability of supplies have been determined correctly.

The reduced rates of VAT, as mentioned above, also applied to certain income relating to admission fees in respect of theatres, amusement parks, exhibitions, and similar cultural events, but not admission to sporting events. Complexities may arise when undertaking the partial exemption calculations where in addition to the admission fee,  income is received in respect of other supplies such as food and drink, or goods such as programmes/brochures, and the partial exemption calculation can become challenging.

What next?

Sandy Cochrane, CBW’s VAT partner, has extensive experience within the leisure and hospitality sector, combined from both working in industry and in practice for over 30 years. Sandy therefore understands the minefield of TOMS, partial exemption and the many other complexities that businesses face in the industry, from both sides of the fence, and how to navigate the best outcome for her clients. Please drop Sandy a line to organise a complimentary discussion using the contact details below.