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Med Hotels appeals £7m VAT ruling

Med Hotels has appealed a tax tribunal’s decision to enforce a £7 million VAT bill, Travel Weekly understands.


The bed bank lost its battle against Her Majesty’s Revenue & Customs (HMRC) at a tribunal earlier this year.


The case hinged on whether Med Hotels was acting as a principal or an agent.


HMRC claimed Med Hotels was liable to pay VAT under the Tour Operators’ Margin Scheme because it was acting as principal. However, owner lastminute.com argued that Med Hotels was acting as an agent and was therefore not required to pay Toms.


The judgment stated that the bed bank was not simply supplying agency services to the hotels, but was “itself supplying the holiday”.


Med Hotels has taken the case to the Upper Tier Tax Tribunal but it could be at least a year before the appeal is heard.


Lastminute sold the assets of Med Hotels to Thomas Cook in January last year, renaming the company Secret Hotels2. It is thought the online travel agency could move to not pay the VAT bill by liquidating the company.


 

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