PracticeConsultingVAT spoils holidays – Deloitte & Touche claims pay too much

VAT spoils holidays - Deloitte & Touche claims pay too much

UK tour operators are wasting millions of pounds each year in VAT overpayments, according to Deloitte and Touche. Deloittes claimed it is unfair for tour operators to pay 17.5% VAT on the brochure price of each holiday when so many holidays are sold at discounted rates.

The position is even worse, said the firm, when travel agents offer discounts in conjunction with the arrangement of travel insurance. Under such circumstances, the discount attracts VAT at 17.5%, while the insurance is also taxed at the same rate. David Bennett, head of the Deloittes’ indirect taxes travel team, said: ‘We firmly believe these discounts should not be subject to VAT.

‘We would advise all tour operators to seriously consider whether or not they have been overpaying VAT. If they have, we urge them to seek professional advice and lodge a repayment claim with Customs and Excise.’

A Customs spokeswoman said: ‘The issue here is the structure of the travel industry and a lack of communication between tour operators and travel agents. But if tour operators themselves are selling holidays at a discounted price and accounted for at the brochure price we will look at the matter very closely.’

While endorsing the basic principle behind Deloittes’ argument, other VAT specialists insisted the authorities are more flexible. ‘Customs knows VAT has to be charged on what the customer spends. We’ve had no problems securing refunds,’ said Chris Fyles, who deals with KPMG’s tour operator clients.

Martin Pooley, a tour operators margin scheme consultant, concluded there was a ‘germ of truth’ in Deloittes’ picture of an unjust VAT system.

Related Articles

5 tips for SMEs to protect cash flow

Accounting Software 5 tips for SMEs to protect cash flow

5m Alia Shoaib, Reporter
Tyrie on Finance Bill 2017: ‘Making Tax Policy Better’

Consulting Tyrie on Finance Bill 2017: ‘Making Tax Policy Better’

11m Stephanie Wix, Writer
Managing partner Q&A - the year ahead: Richard Toone, CVR Global

Accounting Firms Managing partner Q&A - the year ahead: Richard Toone, CVR Global

12m Kevin Reed, Writer
Deloitte 'self-imposes exile' on government contracts to defuse PM row

Accounting Firms Deloitte 'self-imposes exile' on government contracts to defuse PM row

12m Kevin Reed, Writer
Managing partner Q&A - the year ahead: Julie Adams, Menzies

Accounting Firms Managing partner Q&A - the year ahead: Julie Adams, Menzies

12m Kevin Reed, Writer
Friday Afternoon Live: Deloitte's tech thing; PAC wants HMRC 'contingencies'; and Sports Direct

Business Regulation Friday Afternoon Live: Deloitte's tech thing; PAC wants HMRC 'contingencies'; and Sports Direct

1y Kevin Reed, Writer
Friday Afternoon Live: HMRC complaints rise; Deloitte scoops big audits; and corporate reporting woes

Audit Friday Afternoon Live: HMRC complaints rise; Deloitte scoops big audits; and corporate reporting woes

1y Kevin Reed, Writer
New head of equity capital markets for KPMG

Accounting Firms New head of equity capital markets for KPMG

1y Stephanie Wix, Writer