p16 City Mar12 10/3/10 15:47 Page 16
City & finance
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Confidence and
‘Taxman looking
profit levels fall
CONFIDENCE levels in the travel industry have
to squeeze travel’
fallen over the past six months as business
owners have become less optimistic, according
to research by an international banking group.
Rob Gill.
If Medhotels’ appeal is
The Santander Corporate Banking Business TAX authorities are looking to dismissed, then all bed
Confidence Index found that 71% of hospitality target travel as the govern- banks, currently classing
and leisure company owners were confident ment tries to plug its huge themselves as agencies,
about the prospects of their business for the first public sector deficit, according could be forced to take on
half of 2010. This compares with 89% who were to a leading business advisor. principal status and then
optimistic in September 2009. Andrew Burnham (pictured), become liable to pay VAT
The report also revealed that 42% of head of the travel and tourism under the Tour Operators’
hospitality and leisure firms had seen profits fall team at MacIntyre Hudson, Margin Scheme (Toms).
in the past six months. It also revealed that said travel was one of the sec- Burnham’s comments
companies in the travel sector were among tors identified by HM Revenue follow warnings last year
the five least confident business sectors & Customs in its search to find that Revenue & Customs has
alongside construction, energy, transport extra sources of tax. set up a top-level team of anti-tax avoidance
and agriculture. He added that bed banks were particularly specialists to specifically look at the travel
Steve Pateman, head of Santander Corporate vulnerable if Medhotels lost its appeal against industry and VAT due under Toms (TTG October 9).
Banking, said: “Confidence has certainly been an £11 million VAT claim. A decision on the VAT Burnham said the extra cost of paying VAT
knocked in the past four months by the continu- appeal, which was heard in November 2009, is would further erode bed banks’ margins, already
ing squeeze on profits. expected soon. under severe pressure. “A further attack on mar-
“The official end of the recession marks a gins could fuel the push for consol-
turning point but sustained recovery and growth idation,” he added.
will be challenging, requiring support from the “Customs is gathering intelli-
banking industry.” gence to capture more VAT from
travel. If it wins the Medhotels test
case, then pretty quickly it will go
EasyJet boss to
across the industry and look to
move everybody in that business
into Toms.”
run Whitbread
Burnham said taxes would
increase after the UK general elec-
tion due to the size of the public
EASYJET chief executive Andy Harrison will take sector deficit. “It’s been mooted
over at hotel and restaurant group Whitbread that 20% VAT is on its way so it’s
in November. important we squeeze out every
Harrison is due to leave easyJet this summer saving we can,” he said.
and will become chief executive at Whitbread in Even if the Medhotels
November when he will replace Alan Parker, who court appeal is upheld,
is retiring after six years in the role. Burnham said the tax
Whitbread, which owns budget hotel chain authorities were still
Premier Inn, saw group sales rise by 9% for the likely to pursue travel
three months up to February 18. This includes a companies for extra
1.7% sales increase at Premier Inn, compared payments.
with declines in the previous two quarters. Burnham added that it
Premier has more than 40,000 rooms and was important for travel firms to
plans to expand by around 2,000 hotel rooms use legitimate ways to reduce
per year, with land already secured for the VAT, such as using wholesale
new properties. arrangements.
16 12.03.2010
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