Agents could face bills for thousands of pounds as the taxman cracks down on retailers with unpaid VAT on credit card charges.
Travel Weekly understands hundreds of agents have received letters from HM Revenue & Customs (HMRC) demanding payment of VAT on credit card fees dating back four years.
David Bennett, partner at accountants Saffery Champness and an adviser to Abta on VAT issues, said the number of calls he had received from agents who had been targeted by HMRC had escalated in the past couple of weeks.
John Green, managing director at Twickenham-based Thames Travel, received a letter two weeks ago and has appointed an accountant to help him calculate how much he owes.
He said: “This is the last thing I needed. It is very time-consuming and comes at a time when I’ve got to sort out the Atol changes, it is the end of my financial year and it’s busier in the office. The figure will be a fair amount, certainly in four figures.
“Going back four years, this could cripple many agents. Sooner or later every agent will be approached, but most are already asking questions about how to deal with it. We need a common approach.”
Consortia bosses said they were providing guidance for members.
Dave Clayton, managing director of Global Travel Group, said: “We are aware that some agents have received letters from HMRC and we’re assisting them with their response. Our agents have individual relationships with HMRC but we can offer assistance.”
David Moon, head of business development at Advantage, said the VAT request would prove “highly complex and time-consuming” for agents.
“This is a complex subject with arguments and counter-arguments, and the problem is no-one has come out and said categorically this is what you’ve got to do,” he added.
The industry has been forced to accept the demands for payment despite there being no real clarity on whether VAT is payable on the charges.
HMRC is applying a decision made in an Axa UK case concerning the services of Denplan, which collects payment on behalf of dentists under patient payment plans.
The court ruled that charges made by Denplan to the dentists were not exempt from VAT. HMRC is now applying this decision to other intermediaries, including agents.
Abta is expected to issue revised guidance in the coming weeks outlining in which circumstances VAT is due.
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