Ian Bell, head of travel and tourism at accountancy and business advisory firm RSM, said the UK government’s plans aim to “level the playing field” for high street and online retailers – although the way exactly how the new tax system would be taxed is still under discussion.
The first consultation on the new tariff ended last week (May 20), with Bell believing that if services were to be included in the scope of the proposed framework, travel agencies could be held liable.
“One area that needs clarification from the government is whether the tax will apply to both B2B and B2C transactions. This decision could be huge for the travel industry, with many businesses already facing immense pressure on tight margins,” he said. “Businesses will need sufficient notice of the introduction of any new tax given that seasonal commitments and prices are often set months in advance.”
Bell warned that there “still remain a lot of question marks” over whether travel services would fall within the scope of the tax and what impact the new tax could have on the industry.
“What is certain is that it will be a complex task to determine exactly which transactions the tax will apply to, so the Treasury will have to think carefully about the interest of an online sales tax, account given the revenue that could be generated and the additional pressure it would have on an already stretched sector,” he added.