Collapsed Lowcost Travel Group wins VAT victory

A VAT tribunal has come down in favour of the Lowcosttravelgroup, which was attempting to recoup up to £2 million in tax from HMRC when it collapsed last year.

The First Tier Tribunal ruled that both Lowcostholidays and Lowcostbeds were acting as hotel agents, so were not liable to pay VAT in the UK under the Tour Operators Margin Scheme.

Lowcosttravegroup, which collapsed with around £75 million of debts last July, is the latest company to win a battle with HMRC over TOMS.

In 2014, a Supreme Court ruled that bedbank Medhotels was acting as an agent, not a principal, so VAT should be paid in the country where the accommodation was provided, not the UK.

The decision meant the company did not have to pay a £7 million-plus VAT bill.