Revenue and Customs (HMRC) has ruled travel agents are not entitled to VAT refunds on discounted holiday rates and said it would reject any claims. Agents have been urged to appeal.
Accountancy firm Deloitte advised last year that agents who fund discounts from their commission on holidays could be entitled to “significant VAT refunds” for the last four years. Deloitte is understood to have presented claims worth more than £50 million to HRMC on behalf of travel firms.
However, HMRC has rejected the claims on the basis of a technicality.
Deloitte partner Simon Prinn said: “HMRC has confirmed in its guidance that it is going to reject those claims. They disagree on a technical issue that arose. Any agents who put forward claims can expect them to be rejected.”
He said agents could still pursue the matter by appealing to a tax tribunal, suggesting: “Litigation could take a while, but we believe there is technical merit [in the case].”
Prinn urged agents who have not yet put forward claims to do so. “We would encourage agents to review their situation. It is important to know they can claim for the last four years. Every month you don’t claim, you lose a little bit.”
Damon Wright, associate director at accountancy firm Grant Thornton, said: “The choice for agents is give up on getting any VAT repaid or appeal and wait several years for an answer.”