Commentary

BB/8B/06 VAT—clarification of the treatment of travel agent funded discounts

Part V16 Forms and other HMRC material

BB/8B/06 VAT—clarification of the treatment of travel agent funded discounts

BB/8B/06 VAT—clarification of the treatment of travel agent funded discounts

Business Brief, Issue 8. 7 July 2006

This Business Brief article sets out the VAT treatment of supplies by tour operators in cases where agents offer discounts to the travelling customer, following the judgment in the case of First Choice Holidays plc (C-149/01). It also explains what action HM Revenue & Customs (HMRC) will take in relation to voluntary disclosures and assessments resulting from the application of Business Brief 33/02.

Background

Within the travel industry it is common practice for tour operators to sell travel services (eg holidays) through travel agents and for travel agents to offer the traveller discounts on these services. The way discounts are operated can differ depending on the contractual obligations between the tour operator and travel agent. In some circumstances, tour operators agree to discounts being given by the travel agent on the

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