Travel Agent vs Tour Operator in the U.K. | Financial & VAT Differences

Link to full global version: Travel Agent vs Tour Operator | Financial, Accounting & Tax differences explained

In the U.K., the difference between a travel agent and a tour operator is the foundation of your VAT and accounting structure.

Once a business collects client money or sells a package under its own name, it becomes a tour operator under the Package Travel Regulations. That reclassification brings both consumer protection and tax consequences, most notably the Tour Operators’ Margin Scheme (TOMS). VAT is paid on the profit margin rather than the full sale, but input VAT on direct costs cannot be recovered.

A business still selling as a disclosed agent, where the supplier is clearly shown on the invoice, can remain outside TOMS, but the paperwork must make that relationship explicit. Misstating your role can lead to overpaid VAT, misreported revenue, and even audit exposure.

For a deeper look at how this plays out financially across the U.K., U.S., and U.A.E., including examples of margin accounting and merchant-of-record analysis, read our full article.

References

• HM Revenue & Customs (HMRC). (2024). Tour Operators' Margin Scheme (VAT Notice 709/5). GOV.UK. https://www.gov.uk/guidance/tour-operators-margin-scheme-for-vat-notice-7095Relevance:

• The Stationery Office. (2018). The Package Travel and Linked Travel Arrangements Regulations 2018 (No. 634). Legislation.gov.uk. https://www.legislation.gov.uk/uksi/2018/634/contentsRelevance:

Disclaimer

This article is provided for general information purposes only and does not constitute accounting, tax, or legal advice. Regulations, tax rules, and reporting requirements may change, and their application can vary depending on your business structure and circumstances. Readers should seek professional guidance from a qualified accountant or adviser before making any financial, tax, or compliance decisions. Antravia UK accepts no responsibility for any loss arising from reliance on the information contained herein.