The company is one of eight still fighting the tax authority for millions of pounds.
Hotels4U had been due to bring an appeal in 2014 but it never made it to the tribunal. According to the 2012 accounts for Hotels4U.com Ltd, a charge of £14.3 million was included in administrative expenses following an “adverse third-party sales tax judgment”.
A spokesperson for Thomas Cook refused to divulge the amount in dispute, stating only: “Hotels4U, like many others in the travel sector, is in discussions with HMRC over the correct application of VAT.”
It is likely the directors are referring in the accounts to the defeat suffered by Medhotels at the Court of Appeal in its own VAT case with HMRC in 2014.
The case revolved around whether the companies were acting as agents or principals – and how much VAT they were liable to pay. The legal battle made it all the way to the Supreme Court, where Medhotels overturned the previous decision.
Rebate
At the time it was thought that victory would lead to multimillion-pound rebates being delivered to other travel firms in a similar situation, but this has not happened.
Last month TTG revealed that the liquidators for On Holiday Group were headed for their own legal showdown with HMRC in a bid to recover £2.7 million.
Other travel companies including Lowcostbeds and Alpharooms are also disputing cash currently being held by the tax body.
Lawyers specialising in VAT told TTG they had expected the Medhotels decision to bring an end to the debate.
“We all thought back in March two years ago when the decision came out that that should be the end of the matter. But of course it’s not,” said David Bennett, a director at Elman Wall Bennett.
An HMRC spokesperson added: “It is only right that we do not repay any claims unless and until we are satisfied that the money is due.
“We consider each case on its own merits. Where we agree that companies’ arrangements are the same as those in the Supreme Court judgment in the case of Secret Hotels2 Limited, HMRC will and has resolved companies’ claims.”
