Travel firms looking to relocate abroad to cut the costs of VAT, Atol protection or extended Package Travel Regulations need a minimum £100-million turnover to make it work.
That is the view of leading industry accountant Chris Photi (pictured) of White Hart Associates.
Speaking at an industry seminar in London hosted by law firm TravLaw last night, Photi said: “You have to be a certain size [to move abroad]. If you’re not big enough, you can’t afford it.
“You have to be a minimum £100 million business to swallow it.”
Photi added: “You are looking at a six-figure sum before you even start, just for the paper work.”
The annual TravLaw Big Tent Event heard varying estimates of how many companies may look to move abroad to avoid changes to Atol funding and save on tax in light of the Med Hotels ruling upholding a VAT claim against a bed bank.
Photi revealed he had helped three or four companies move in the past “couple of years”.
He said: “Why would larger companies not look at moving if they are not happy with what is on the horizon?”
But he said: “Don’t think you can just put a name plate up in a different jurisdiction. You need to be careful. You have to comply with the regulations in the country you’re based in.
“You have to do it properly. If the only reason is to avoid VAT, you may feel the full force of HMRC [Revenue and Customs].”
Travel Trade Consultancy director Martin Allcock agreed, saying: “You have to move all the senior managers, the decision makers, away from your source market, away from where the action is, and you won’t be moving to a jurisdiction with no regulation.
“It can work for a handful of companies, but there is a risk.”
Abta senior legal advisor Paula Macfarlane warned: “It is difficult to get around the Package Travel Regulations. You can’t just move away and still sell to UK customers.”
And lawyer Matt Gatenby of TravLaw said: “If you’re thinking of doing it, there must be a good reason because there are a lot of potential pitfalls.”