Thomas Cook-owned bed bank Hotels4u is poised to bring an appeal to a VAT tribunal, Travel Weekly understands.
The challenge against Her Majesty’s Revenue and Customs would follow the successful appeal by Med Hotels over a £7 million VAT bill.
Med Hotels, formerly owned by lastminute.com and now also owned by Cook, won a landmark decision in the Supreme Court in March against a claim that it was liable for unpaid VAT.
Thomas Cook said it could not comment on details of talks with HMRC, but confirmed that “H4U, like many other companies in the sector, is in discussion with HMRC as to how the Secret Hotels2/Med Hotels VAT case applies to it”.
Travel Weekly sources say a VAT appeal hearing involving Hotels4u is scheduled to take place in London on Friday, although the sides could still come to an agreement before then.
HMRC had claimed that Med Hotels had acted as an operator rather than an agent during a period when it was owned by lastminute.com and therefore fell under the Tour Operators Margin Scheme (Toms).
Other firms in the same position facing claims for VAT had hoped the judgment would see them recompensed for VAT they had already paid.
But Travel Weekly understands that none have been paid so far as HMRC focused on minor differences in firms’ positions to justify its stance.
It is estimated that around £100 million is at stake in total, involving around 20 firms.
One of the firms expecting a payout was the failed On Holiday Group, now in liquidation, which claimed the Med Hotels case had “destroyed it” as it had to pay £4 million in VAT under Toms.