Creditors of HotelConnect given June 23 deadline for claims

Creditors of failed accommodation supplier HotelConnect, which ceased trading in 2011, can finally expect a pay-out but only if they have submitted claims by June 23.

HotelConnect liquidator William Antony Batty, of Antony Batty & Co, is holding more than £1.2 million in funds to disperse to creditors following a final settlement with HM Revenue & Customs (HMRC) over an outstanding VAT rebate.

More than 6,000 claims totalling in excess of £6 million were received from creditors after HotelConnect was wound up in July 2011.

However, the liquidator has so far only received claims from 215 creditors, totalling about £2.3 million, and dividends can only be paid to those who have submitted formal claims.

A dividend payment of about 50p in the pound is anticipated, which is unusually high following a travel business failure.

The final settlement has been so long delayed because the VAT rebate was linked to the lengthy court battle between HMRC and Secret Hotels 2 (Medhotels) over whether the bed bank acted as an agent or supplier and was liable to VAT under the Tour Operators’ Margin Scheme (TOMS).

The issue went all the way to the Supreme Court, with HMRC seeking payment of more than £7 million from Secret Hotels 2, which was sold by Lastminute.com to Thomas Cook in 2009. 

The Supreme Court ruled the bed bank was not liable for VAT in early 2014, but not before HMRC had billed other accommodation providers for similar amounts of TOMS VAT.

HMRC continued to withhold repayments of these sums while it considered an appeal to the European Court of Justice until this route was closed. It also sought to dispute the applicability of the Supreme Court ruling in other cases.

Only in May 2020 did HMRC confirm it would not continue to appeal. But the exact amount of the VAT rebate owed HotelConnet, the interest and deductions of other money owed, remained subject to protracted negotiations.

The liquidator finally secured a refund of more than £1.8 million from HMRC, although £500,000 of this was initially set off against other money owed.

This sum was subsequently revised and a further payment of more than £143,000 received from HMRC together with interest on the debt.

Travel businesses which may have a claim should contact Antony Batty at antonyb@antonybatty.com and submit a claim form.

Those which do not submit claims by June 23 will lose the right to subsequently make any claim.