This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

VAT Transport

Zero-rating of passenger transport: Inclusive tours

Passenger transport which is bought in and re-supplied to a traveller, either on its own or as part of a package or inclusive tour, must be accounted for under the Tour Operators’ Margin Scheme. If any other travel, hotel and holiday facilities have been bought in and re-supplied to a traveller, these must also be accounted for using the margin scheme.

An in-house supply of passenger transport (such as the provision of a driver plus vehicle for the purpose of passenger transport), does not fall within the scheme and is accounted for in the normal way, unless it is provided together with other travel and hotel facilities which are bought in and re-supplied to a traveller, in which case the “in-house” transport must be included in the scheme calculation.

However, the taxing of public passenger transport services is a politically sensitive area and you must contact Supply Policy Team for advice before taking any action in such cases.

V1-23 Schemes, Chapter 12 and Notice 709/5 Tour operators’ margin scheme, give details of the operation of the scheme.