The UK tour operating industry is today celebrating a landmark High Court decision which should lead to an estimated £20m windfall for the sector. The court, in a case involving First Choice Holidays, advised by KPMG, has upheld a previous VAT tribunal ruling that package holiday discounts granted to customers by travel agents (often without the knowledge of the tour operator) can be deducted from the operator's turnover for VAT purposes.
Customs' position was that VAT should be calculated according to the holiday price advertised in the brochure and that the actual price payable by the customer should be disregarded. The Court ruled against that view and Customs have now announced that they intend to take the matter to the Court of Appeal.
