The flight-plus Atol that will extend consumer protection to dynamic packages will not leave agents liable for VAT, according to the civil servant drafting the regulations.

Kate Jennings, head of aviation policy implementation at the Department for Transport (DfT), told an Abta travel law seminar yesterday: “We’re working closely with Revenue and Customs, whose position is there is nothing in the proposals that would make flight-plus Atol holders liable for VAT.”

She said: “We will include paragraphs on that in the forthcoming consultation.” The DfT is preparing to consult next month on extending the Atol scheme to retailers through a flight-plus licence.

Jennings conceded the timetable had slipped “a few weeks” – the consultation had been expected in May – but added: “It remains our intention that the legislation be in place in January.” She said the consultation would be on the detail and definition of flight-plus. “We’ve already consulted on the principles,” she said.

Jennings said the industry would be consulted on whether the scheme should include airlines and also whether it should include retailers who act as agents of the consumer. She said the consultation would include an assessment of the costs of compliance for retailers, but declined to give details.

Responding to criticism of the reforms’ limitations, Jennings described the proposals as “a sticking plaster”, pending possible changes to legislation in a Transport Bill next year and a full review of consumer protection by Brussels. However, she said: “A fundamental reason is also the deficit in the fund behind Atol. Ministers feel that must be paid down.”

Yet she argued the original reasons for introducing consumer protection remained as strong as ever. “Customers pay upfront for services they do not receive for months and they might be stranded overseas if a company fails,” she said. “That has not changed.”