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Agents missing out on VAT refunds
Hundreds of travel agents could be missing out on thousands of pounds worth of VAT refunds, according to a financial services group.
Experts at Smith & Williamson say while the large travel chains are on the case, small and medium travel agents are failing to lodge their claims.
They say agents who sell holidays from a tour operator at a discount to the brochure price could be in line for a VAT refund amounting to thousands of pounds.
Claims relate to ‘funded discounts’ on package holidays, including cruises, where the agent offers a discount funded by commission sums expected from the tour operator.
Claims can be taken back four years and if businesses delay in sending a claim to the tax authorities they could lose out.
“Medium and smaller firms are literally leaving cash on the table by failing to submit their claim. As each day goes by, the amount they can claim falls due to the four-year cap,” said Hannah Dobson, a VAT director at Smith & Williamson.
“It seems that the larger chains are on top of this but many smaller organisations are unaware of what could be owed to them.”
“Although agents discount holidays at any time of year to make a sale, as we reach the peak holiday season, these ‘funded discount’ arrangements will become even more common as they try to sell off any remaining packages.”
Until now, a UK travel agent would have paid VAT on the full commission received from the tour operator, even if the agent ‘gave away’ some of this commission through brochure price discounts.
The opportunity now exists to recover VAT paid on these funded discount sums.
“The claims procedure is straightforward and not time consuming. Any firm who keeps a note of the discounts they have made on holidays sold on behalf of tour operators should be able to do this quite easily.
“I would advise any firm who thinks they are eligible to claim to look into this without delay.”
By Bev Fearis
Bev
Editor in chief Bev Fearis has been a travel journalist for 25 years. She started her career at Travel Weekly, where she became deputy news editor, before joining Business Traveller as deputy editor and launching the magazine’s website. She has also written travel features, news and expert comment for the Guardian, Observer, Times, Telegraph, Boundless and other consumer titles and was named one of the top 50 UK travel journalists by the Press Gazette.
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