AGENTS are waiting for guidance from Revenue and Customs and ABTA to clear up confusion over whether they should pay VAT on their profit margin.
It is feared agents and accommodation-only companies that put together packages might face VAT payments through the Tour Operators Margin Scheme, following a ruling at a tribunal in Manchester in March.
Cendant-owned International Life Leisure claimed unsuccessfully it was acting as an agent and was not eligible for a £600,000 tax bill. A Revenue and Customs spokesman admitted its new guidance “may go a bit wider” than previous interpretations.
Midconsort chief executive Charles Eftichiou fears Customs could force agents to pay VAT to make up revenue lost from a downturn in package sales.
Hotels4u.com sales and marketing director John Harding said the move would lead to price rises with increased costs being past on to the consumer.
“It’s worrying, but the customer is just going to have to pay more,” he said. “It isn’t going to come out of our profits.”
ABTA’s guidance notes will advise agents about how to make sure they do not fall into the trap of acting as a principal.