Revenue victory over tourism industry VAT

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Travel agents are likely to face increased tax bills on their commission after HMRC won a Court of Appeal case about a £7m VAT bill for hotel accommodation.

The court ruled in favour of HMRC in the case of Secret Hotels (Medhotels), overturning a decision last year by the upper tribunal. Experts say the decision will have a big effect on the travel industry.

Medhotels, previously named ‘Secret Hotels 2’ before it was acquired by Thomas Cook, argued that if it sells accommodation to a traveller through its website or via third party travel agents, the agency commission falls outside the scope of UK VAT under the Tour Operators’ Margin Scheme (TOMS).

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Nick Huber
Freelance journalist
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07th Dec 2012 13:36

TOMS

is a nightmare - clarity is needed

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07th Dec 2012 14:17

but the impact is not good for UK plc..

Looks like they have fallen foul on technicalities, but this should be within TOMS otherwise the impact is not good for UK plc..

'Many travel intermediaries will want to confirm whether their position in the supply chain is one of agent or principal'... or whether to just close their UK operation and run it from some low tax state... after all selling overseas hotel accomodation to people via the web can be done from anywhere.

Many travel intermediaries will want to confirm whether their position in the supply chain is one of agent or principal

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