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TaxRobin
TaxRobin, Tax Consultant
Category: Tax
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Experience:  International tax
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To Whom it may concern I am running Diving School – VAT

Customer Question

To Whom it may concern
I am running Diving School – VAT Ltd Company. We are organising a diving trip to Farne Islands (sea diving) in UK. The price for the trip is £250. It is based on:
Accommodation - £150 (camps site pays VAT and will issue us VAT receipt)
Diving - £90 (operator is not VAT company as vessels are excluded – if I’m correct
School Profit - £10
How do we pay VAT to HMRC?
Accommodation £125+£25 (VAT) = £150
Diving VAT – £0
Profit VAT £8.33 +£1.77 (VAT) =£10
Total VAT to pay per person - £26.77
Am I correct?
How do I account for VAT if people pay deposit in two instalments (deposits)? One 12 weeks before trip - £100 and the rest 4 weeks before the trip - £250
Kind regards
Krzysztof
Submitted: 2 years ago.
Category: Tax
Expert:  TaxRobin replied 2 years ago.
Hello and thank you for allowing me to assist you.
You account for the VAT for each payment you receive during the periods that the tax occurs. If you use the cash accounting scheme you’ll account for the VAT when you receive payment from your customers unless it’s a returnable deposit.
An advance payment, or deposit, is a proportion of the total selling price that a customer pays before you supply them with goods or services.
You include the VAT due on the advance payment on the VAT Return for the period when the tax point occurs.
The tax point if you ask for an advance payment is whichever of the following happens first:
the date you issue a VAT invoice for the advance payment
the date you receive the advance payment
Each payment is a tax point. If the deposits are non refundable, you should declare VAT on the deposit when you receive the payment or when you issue the VAT invoice, whichever happens first.
FREE EXTRA INFORMATION FOR YOU
HMRC has a Notice published that explains the different tax points:
https://www.gov.uk/government/publications/vat-notice-700-the-vat-guide/vat-notice-700-the-vat-guide#time-of-supply-tax-point-introduction-and-general-rules
You may wish to read over the above just to give yourself a better understanding.
Customer: replied 2 years ago.
Can I apply TOMS to my operations and pay VAT only on profit made without claiming any other VAT from suppliers - for example accommodation?
Expert:  TaxRobin replied 2 years ago.
That is really a different question. The changes made to TOMS appear to apply to your business.
As you are a business that buys-in and re-sells travel and accommodation as a principal or undisclosed agent (that is, acting in your own name) you could use TOMS as long as you are not using Cash Accounting.
Expert:  TaxRobin replied 2 years ago.
Hi Krzysztof,


I'm just following up with you because you did not respond nor did you rate.

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