New financial rules will require some Atol-holders to make “dramatic changes” to renew their licences this autumn, a leading travel industry accountant has warned.
Chris Photi, senior partner at White Hart Associates, said firms could be forced to join Atol-accredited bodies or make trust arrangements. He blamed the “small print” on new financial tests introduced by the CAA as part of its ‘Rebalancing Atol’ programme.
Holders of Small Business Atols (SBAs) and standard Atols for under £20 million must meet the requirements of a financial assessment introduced on June 1 when they renew their licence in September 2016 or March 2017. This includes tests of financial stability, liquidity and profitability.
Photi identified a change in the assessment of liquidity, or how much cash a business has, suggesting that previously the CAA would allow inclusion of a fixed asset such as a company-owned property when assessing an Atol‑holder’s finances.
He noted there appears no way to include the value of such an asset in the new tests. Photi said: “Companies previously had some flexibility to say ‘we have a £1 million property’. Some will have to change their financial practices.
“There are going to be some who do not get Atols renewed unless they do something dramatically different, either join an accredited body or operate a trust.”
However, a CAA spokesman told Travel Weekly: “There is no reason an Atol-holder cannot declare a business asset, including a property.”
The CAA has pledged to be “sensitive to those who have difficulty in initially meeting the new criteria”, and Photi said: “I expect the CAA to be reasonable. But there are going to be issues, especially on the SBA side.”
He advised all firms to fill in a self-assessment form on the CAA website as soon as possible to get an indication of the likely outcome and allow time for a meeting with the CAA.