TaxPersonal TaxHoliday VAT causes spat

Holiday VAT causes spat

Travel agents plan to challenge Customs & Excise’s decision not to alter the VAT treatment of discounts on package holidays provided by tour operators.

Travel agents routinely discount holidays and pass the brochure price, less commission, to tour operators. The operator accounts for the full brochure price under the Tour Operators’ Margin scheme, while the agent accounts for output tax on the commission – deducted as input tax by the operator.

Customs said no VAT adjustment was needed even though travellers paid lower prices than advertised. Chris Fyles, a senior VAT manager in KPMG’s travel and automotive group, said the Elida Gibbs test case two years ago established that tour operators should only be liable to VAT on the final price. He said: ‘Customs are saying they don’t agree. They haven’t entertained refunds. So it is a bit of a surprise.’

David Bennett, head of Deloitte & Touche’s indirect tax travel practice, said: ‘In certain circumstances, it will lead to double taxation. We will be challenging the matter.’

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

15h Lucy Skoulding, Reporter
HMRC appeal rejected in Tottenham Hotspur case

Administration HMRC appeal rejected in Tottenham Hotspur case

2w 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

4m 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