Agents face back-dated tax on incentive earnings

Agents face back-dated tax on incentive earnings

Travel agents could be accruing thousands of pounds in back-dated tax liability on tour operator incentives, a supplier has warned.

Fears that HM Revenue & Customs will soon clamp down on agents which have not paid tax on operators’ incentives in recent years have increased since the March Budget, when chancellor George Osborne said tax avoidance would be tackled.

The issue is particularly pertinent to long-haul luxury, as some suppliers offer hundreds of pounds for selling their products.

Funway Holidays managing director Stephen Rhodes urged agents not to stick their heads in the sand. “HMRC would claim monies owed going back at least four years,” he said. “Agents should start paying the tax or use tax-free incentive schemes.”

Some operators already pay the tax and national insurance on incentives while those that don’t may “bury it in the terms and conditions”, according to other suppliers that have signed up to Funway’s MoneyCard scheme, which pays the tax for agents.

Aito Agents chairman Gemma Antrobus said the issue was a real concern. “Most Aito Agents are quite savvy, but I don’t think frontline staff generally know who pays tax on which vouchers.

“In January, some agents were earning £200-£300 per booking. It only takes one operator that doesn’t pay the tax to get a visit from the taxman, who will find the agents that have been paid incentives.”

Advantage Travel Partnership commercial head John Sullivan was confident members were aware of the tax liability. “We publicise incentives only if the tax is already paid,” he said, but added that agents accepting incentives directly from a supplier may be vulnerable.

“It is up to them to make sure they are complying from a tax point of view,” he said.


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