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VAT exemption hope for UK travel agents

Thursday 9 May 2013

VAT exemption hope for UK travel agentsTravel firms could be in line to benefit from a ruling which indicates card handling and similar booking fees should be VAT-exempt.

A legal judgment which suggests card handling fees should be exempt from VAT could prove beneficial to UK travel agents.

Following a dispute between the National Exhibition Centre (NEC) and HM Revenue and Customs (HMRC), the Tax Tribunal found that booking fees charged by the venue’s box office in relation to event tickets should not be liable for VAT.

According to business advisory firm Deloitte, the case could have positive implications for travel agents many of whom have long believed card handling and similar booking fees should be VAT-exempt.

NEC disputes VAT on booking fees
The NEC’s box office currently sells concert tickets to the public on behalf of event promoters, adding booking fees and transaction costs to the price of tickets.

Its dispute with HMRC centred around the question of whether the NEC received booking fees as an agent for promoters, or as principal. Along with this issue, the tribunal considered whether booking fees are charged by the NEC for a wide array of services - or just for card handling costs.

The tribunal decided that booking fees should be exempt from VAT, after concluding that the NEC receives this income as principal, and that they relate to card handling charges rather than consideration for a variety of services.

Positive implications
Responding to the judgment, Deloitte suggested that travel agents are among those who could be positively impacted.

Travel firms often serve as disclosed agents for tour operators, acting as principal when charging payment handling fees.

But Dan Barlow, from Deloitte’s VAT travel team, highlighted that HMRC has expected travel agents to apply the standard rate of VAT on their booking fee income over the past decade.

In light of the NEC judgment, he added: 
“If HMRC accepts the tribunal’s judgment then travel agents should be entitled to repayments of VAT previously declared on booking fees.”

Next steps for travel agents
Mr Barlow emphasised that it is still possible for HMRC to appeal against the tribunal’s initial decision in this dispute.

He said travel agents who believe they could be due VAT repayments should consider making claims and also check with HMRC whether it expects to appeal the ruling, or plans to make repayments.

Mr Barlow concluded that travel agents will also need to check whether any claims they have made for overpaid VAT are fully up to date.

For further information please contact: 
Tom Walsh ( or 0118 322 2849), 
Andy Beavers ( or 0161 455 8576) or 
Dan Barlow ( or 020 7007 6772) in the Deloitte travel team, who will be happy to help.

Copyright Press Association 2013


Related links

  • Indirect Taxes
    Deloitte’s Indirect Tax group provides advice on VAT, customs and excise duties, landfill tax and other environmental taxes.

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