TOMS must be used when the following five conditions are all satisfied:
1. There is a supply of travel services
The term "travel services" is not defined by law. In the view of HMRC, the supply of certain items, "primary travel services", is always within TOMS if the other conditions listed below are satisfied. These primary services are:
- Passenger transport
- The hire of a means of transport
- The use of an airport lounge
- Tour guides
- Trips and excursions
Please note that there is no need to have a package for TOMS to apply; the supply of any of the above on its own can be in TOMS.
In addition, "secondary travel services" fall within TOMS if supplied as part of a package with primary travel services and these include sports tickets and facilities, theatre tickets and catering. For example, a theatre ticket sold on its own does not fall within TOMS. However, the sale of such a ticket together with, say, a hotel room will be within TOMS if the other conditions listed here are satisfied.
2. The supplier is acting in its own name.
A supplier must act as a principal or as an undisclosed agent to fall within TOMS. A supply made on a disclosed agency basis cannot be within the scheme. The distinction between these terms can be very difficult and many travel businesses display certain characteristics of an undisclosed agent and/or principal but, at the same time, resemble a disclosed agent in other respects. There is often great uncertainty and considerable scope exists for disputes with HMRC, as demonstrated by the Secret Hotels 2 (formerly Med Hotels) case which considered the meaning of agent in a travel context. This was decided in favour of Med by the Supreme Court in 2014 and, since then, similar decisions have been given in the Hotels4U, Opodo, Hotelconnect, Alpha Rooms and Lowcost cases.