Youtravel.com has said the move by Med Hotels to appeal an £11 million VAT claim from Her Majesty’s Revenue and Customs will clarify tax liabilities in the accommodation-only sector.
Med Hotels is appealing a VAT assessment based on the period between 2007 and 2008 when the bed bank was owned by lastminute.com. It was bought by Thomas Cook at the beginning of 2009.
A spokeswoman for lastminute.com said: “We have appealed because we are very confident Med Hotels was acting as a disclosed agent. A tribunal is scheduled for late November, and we expect a decision in late February 2010.”
Youtravel.com managing director Graham Nichols said the outcome of the case would help create a “level playing field” for bed banks, regardless of whether they act as agent or principal.
He said: “We have been asking for a level playing field on this issue for some time, and have investigated the agency model in great detail.
“We will either move to the agency model, or remain principal and continue to pay the Tour Operators’ Margin Scheme (TOMS), if indeed other bed banks are required to do this.”
The outcome of the case could have a far-reaching effect on the accommodation-only sector. Several bed banks dropped principal status last year, saying it would help keep their prices competitive. Those who act as agents consider themselves exempt from paying VAT under TOMS.