Ian Bell, head of travel and tourism at accountancy and business consultancy firm RSM, said the plans by the UK government seek to “level up the playing field” for high street and online retailers – although exactly how the new tax system would be imposed is still being discussed.
The first consultation on the new tariff closed last week (20 May), with Bell believing if services were to be included within the scope of the proposed framework, then travel firms may find themselves liable.
"An area that requires clarification from the government is whether the tax will be applicable to both B2B and B2C transactions. This decision could be huge for the travel sector, with many businesses already facing immense pressure on tight margins," he said. "Businesses will need sufficient warning of the introduction of any new taxes given that seasonal commitments and pricing are often set many months ahead."
Bell warned there "are still a lot of question marks" on whether travel services would fall within the scope of the tax and what impact the new levy could have upon the industry.
“What is certain is it will be a complex task to determine exactly which transactions the tax will apply to, so the Treasury will have to think carefully about whether an online sales tax is worthwhile, considering the revenue that could be raised and the additional pressure this would have on an already squeezed sector,” he added.
