TaxPersonal TaxTravel industry celebrates VAT victory

Travel industry celebrates VAT victory

The UK tour operating industry is celebrating today after a landmark High Court decision, which will lead to a £20m windfall for the sector.

The Court, in a case involving First Choice Holidays, upheld a previous VAT tribunal ruling that package holiday discounts granted to customers by travel agents can be deducted from the tour operator’s turnover for VAT purposes.

Customs & Excise took the position that VAT should be calculated according to the holiday price advertised in a brochure and that the actual price payable by the customer should be disregarded.

Director of KPMG’s travel industry VAT team Chris Fyles, who advised First Choice Holidays, said: ‘This is a decisive judgement which should clear the way for tour operators to receive funds for the VAT they have overpaid. Moreover, the ruling will have no impact on the VAT position of travel agents – since the agency commission VAT calculation will be unchanged.

‘Subject to the outcome of the appeal action by Customs, those operators who have lodged retrospective refund claims should now be able to look forward to a repayment of the VAT involved.’

The challenge to the Customs ruling was mounted by First Choice with support of rivals Airtours, Thomas Cook and Thomson Travel.

Related Articles

LITRG urges government to consider tax changes in disability work plan

Administration LITRG urges government to consider tax changes in disability work plan

5d Lucy Skoulding, Reporter
HMRC appeal rejected in Tottenham Hotspur case

Administration HMRC appeal rejected in Tottenham Hotspur case

3w Emma Smith, Managing Editor
HMRC urged to clarify impact of income allowances on Self-Assessments

Personal Tax HMRC urged to clarify impact of income allowances on Self-Assessments

2m Alia Shoaib, Reporter
New trading allowance: simplicity, but not as we know it

Administration New trading allowance: simplicity, but not as we know it

2m Emma Rawson, ATT Technical Officer
Wealthy individuals could circumvent top tax rate rises

Personal Tax Wealthy individuals could circumvent top tax rate rises

4m Alia Shoaib, Reporter
Italy grants first successful non-dom status application to former UK non-dom

Personal Tax Italy grants first successful non-dom status application to former UK non-dom

5m Emma Smith, Managing Editor
Industry reaction: Taylor Review does not go far enough in addressing tax issues

Legal Industry reaction: Taylor Review does not go far enough in addressing tax issues

5m Alia Shoaib, Reporter
Does the Taylor Review sufficiently address the gig economy?

Corporate Tax Does the Taylor Review sufficiently address the gig economy?

5m Alia Shoaib, Reporter