Endacott issues VAT liability warning to agents

The founder of failed bed bank and retailer On Holiday Group has warned that agents operating under Flight-Plus Atol may be next to fall victim to HM Revenues and Customs (HMRC).

Steve Endacott, who is now chairman of Teletext Holidays, said he believes more travel businesses will feel the brunt of the tax office as new regulations are brought in.

Endacott previously blamed the failure of his business last March on HMRC withholding £4.5 million of disputed VAT, which left the business unable to pay hoteliers.

He said: “HMRC has lost to the bed banks with a clear ruling. If you think HMRC has gone away you’re mad.

“They’ll be looking for their next target, and sitting right there in their eyesight is travel agents, and that’s because agents all signed up to Flight-Plus which makes you the principle. How are agents different from the tour operators?

“If there is any doubt about that, wait until 2017 when the European travel regulations [revised Package Travel Directive] come in and absolutely make agents the principle.

“The VAT problem will force people out of the country because companies will either go to the best ‘Atol’ regime in Majorca or somewhere outside of the EU.

“We will lose jobs and it will damage the industry and it’s coming.”

Giving an honest account of the failings of OHG at the latest ITT Odyssey Dinner in London, Endacott said the company’s error was focusing on supplying the trade with beds.

He said: “We decided to focus on beds because we thought it would be a differentiator but we were wrong.

“We were fundamentally, totally and utterly wrong because we didn’t understand the Google algorithm on search.

“If we’d have gone into Google as B2C, which was always our plan, we would have been successful.

“We got wrapped into doing B2B and beds because it was working and we were making money. We got it wrong and we should have gambled.

“We turned down £10 million for the business from a major OTA in 2008 because we thought it would work but we didn’t see what was to come – HMRC.”

Endacott said his company turned “toxic” while they were waiting for a final decision on VAT liability in the MedHotels case that went on for four years.

“The last four years of On Holiday Group were a complete and utter waste of time and I knew that but entrepreneurs don’t like giving in and we were determined. We fought damn hard but by then we were toxic.”

He said by that point investors weren’t interested in buying the business, although admitted that dnata and On The Beach both looked at potentially taking it on.

He said he was still fighting HMRC and the OHG liquidators believe it “could be the highest pay out ever”.

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