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COMMISSION DISCOUNTS


Deloitte advises travel agents to claim VAT back from HMRC


Sophie Griffiths


TRAVEL AGENTS are being urged to put in claims against HMRC for a percentage of the VAT paid on commission, which could result in the industry being owed up to half a billion pounds, tax experts have said. The recommendation for agents


to start lodging claims comes despite news last week that judges had rejected Tui Travel’s agent discount reclaim, worth £156 million. The travel giant has submitted


claims stretching back as far as 1980, backed by Deloitte, which also has claims for a “substantial number” of other travel agents. Tui argued that it should be able


to reclaim a percentage of its VAT on commission because a certain amount of it was being given away as a discount by its agency shop staff. But HMRC responded by questioning


why the taxman should adjust the VAT paid on commission because agents were choosing to use some of it to fund a customer discount. The First Tier tribunal, which heard the case at the end of last year, found in favour of HMRC with the results published last week. However Simon Prinn, an


indirect partner at Deloitte, said the judgement had been expected, and that he was still optimistic the courts would ultimately find in favour of Tui, paving the way for other agents to step forward with claims. “The same issue has arisen elsewhere in Europe and the German courts have recently referred a similar case, Ibero Tours, to the European Courts of Justice,” he said. “We’re telling our clients to maintain their appeals. I feel optimistic that the courts will find in favour of Ibero Tours. We don’t take cases on that we don’t have confidence in.


AIR TRAVEL TRUST


DfT puts off ATTF decision until March


“Discounting is widespread, so this issue ought to affect nearly every travel agent,” he added. “There’s no minimum limit – for smaller agents the amount owed could still be in the thousands.”


Prinn said agencies, no matter how small, should be looking to take professional advice, although he warned that back-dated claims would be capped at four years. He said agents should also expect


their first claim to be rejected, but should continue with the appeal while the industry awaits a ruling from Europe. “The first tier tribunal doesn’t necessarily set a precedent,” Damon Wright, director of VAT services at MacIntyre Hudson, added. “Although it could be several years before a final outcome is known,” he warned.


■Read Damon Wright’s full opinion on the case at ttgdigital.com


AND THEY’RE OFF: Carnival Triumph finally docked in Alabama last Friday, to passengers’ chants of “let me off”. The ship had been stranded without power for days in the Gulf of Mexico after an engine room fire. Passengers have been offered $500 extra compensation in addition to a full refund for the cruise. Reports had emerged of onboard conditions that included sewage on the floors, poor sanitation and limited access to toilets. Carnival chief executive Gerry Cahill apologised again for the “very poor” conditions onboard. “We pride ourselves on providing our guests with a great vacation experience, and clearly we failed in this particular case,” he said in a statement.


APC could quadruple to £10


THE DEPARTMENT for Transport’s call for evidence to decide the future of the Air Travel Trust fund will be announced in March, TTGhas learned. The DfT confirmed that an announcement would be made next month, despite the trade’s expectation that the call for evidence would be made in February. It comes as Alan Bowen, legal advisor to the Association of Atol Companies, admitted that hopes for an alternative scheme backed by insurers had fallen through. “We’ve spent three months trying to get insurers onboard but they don’t seem to want anything to do with the travel industry,” he said. “The other alternative is trust accounts, which in theory is great, but you need to have trustees who have absolute certainty that the companies they are working for are telling the truth, and the only way of doing that is through regular monitoring of funds and that is very expensive. Having a trust account also kills off cash flow – it would mean a lot of added costs for business owners.”


Bowen said instead he believed the only real alternative would be to increase Atol Protection Contributions, although he did not believe they would rise beyond £5 per passenger, despite fears from other industry experts that the APC could quadruple to £10 (TTGJanuary 24).


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