Skip to main content

NEC Decision on Booking Charges – Good News for Travel Agents

By May 23, 2013January 9th, 2024Uncategorized|VAT news

The decision in the National Exhibition Centre Limited (‘NEC’) case on the VAT treatment of booking fees has found in favour of the tax payer. This means that the NEC can treat its income from Booking fees as exempt from VAT.

The NEC decision hinged on whether the services supplied by the NEC qualified as exempt payment handling services. It was confirmed that the supply by NEC to its customers effected payment and therefore qualified for exemption. This is good news for travel agents who have been assessed by HM Revenue & Customs (‘HMRC’) following the Court of Appeal decision in Bookit Limited (where HMRC have argued that the activities of the travel agent did not affect payment and therefore failed to fall within the exemption). In our view the activities undertaken by travel agents are on all fours with those in the NEC case. In respect of this and the number of assessments raised in this area it is likely that the decision will be appealed by HMRC.

If NEC are ultimately successful this will mean that travel agents will have a competitive advantage over those accounting for VAT under the Tour Operators Margin Scheme. Unfortunately, such businesses will only enjoy the benefit of the exemption in the situation where the payment handling services are being supplied by a separate entity (i.e. the structure in place is akin to that in Bookit Limited/ NEC).

At The VAT Consultancy we have considerable experience of advising clients on the VAT treatment of these services and the options available to both travel agents and tour operators. Therefore, if you have any questions regarding the case or would like to discuss the issue further, please  contact Martyne Pearson on Martyne.pearson@thevatconsultancy.com or call on 01962 735 350.

Leave a Reply