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Government Consultations Affecting ALL Tourism Businesses

 

Update 19th July 2018.

 

SWTA has fed back to the Government on all the recent consultations as we seek to use this opportunity to guide Government policy on several keys areas, a reduced rate of VAT for Tourism, how Inheritance Tax relief should be reinstated for professional holiday letting businesses, a proper discussion on the VAT threshold and its impacts, as well as feeding back on the impact that the unregulated ‘sharing economy’ is having.

 

Details of the Government Consultations and APPG’s are below. 

 

All Party Parliamentary Group enquiry into the sharing economy

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SWTA has been heavily involved with lobbying the Government to try to establish a ‘Level Playing Field” across the accommodation sector.

 

This simply means that anyone offering their accommodation for payment must meet the same levels of insurance, regulation and taxation that Professional Self-Caterers do.

 

SWTA was called to give both oral and written evidence to the APPG (All Party Parliamentary Group) on the Sharing Economy. The final report was published on Wednesday the 18th July 2019 and is a victory for both common sense and a level playing field for all accommodation businesses having to comply to the same legislation. We would like to give our thanks to the Chair of the APPG, Gordon Marsden, MP, and to Kurt Janson, from the Tourism Alliance, who provided Secretariat Services.

 

The Key findings are as follows:

 

Having considered the evidence both from the sharing economy and from the rest of the tourism industry, the APPG for Tourism recommends that the Culture Secretary launch a consultation on using his powers under the Development of Tourism Act 1969 to establish a low-cost statutory registration scheme for tourism accommodation businesses. Such a scheme could be devolved to councils and would help resolve the main issues identified by this Inquiry. Specifically:

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• Help ensure that all businesses complied with regulations

• Provide enforcement officers with a database of tourism accommodation properties so that they could target their resources to those properties they deem to be the highest risk

• Provide councils with greater ability to manage tourism in their area

• Provide HMRC with a means by which to ensure that all businesses pay the appropriate level of taxation.

 

In addition, that the Government provide Local Authorities with powers to set rules regarding the use of residential properties for Tourism Accommodation so that local solutions can be developed that balance the benefits generated by sharing economy accommodation with needs of local residents. These powers include:

 

• The ability to set the maximum number of days per annum that a property can be used for tourism accommodation.

• The ability to require the owner of the property to be present if a property is used for tourism accommodation

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The full report can be seen here

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VAT REDUCTION FOR TOURISM CONSULTATION

The demands by the DUP in Northern Ireland for a reduction in Tourism Tax had now led to a Government Consultation into the impact of VAT and Air Passenger Duty on tourism. This is major step forward and we have a real opportunity of pushing for change here. The evidence is available, one of the PASC Board members, Graham Wason, is the founder of the Cut Tourism VAT campaign and real fiscal evidence will be provided as part of this consultation.

 

More details: Consultation into VAT

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Input into the consultation closed on 5th June 2018. As soon as any responses are available from Government, updates will be posted both here and on Twitter

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CONSULTATION INTO THE VAT THRESHOLD

 

An additional consultation has also been opened on the issue of the level of the VAT threshold. This consultation looks at further simplification options, and in particular at why businesses choose not to grow beyond the current £85,000 threshold. The paper looks at three options, one a harmonised EU approach, one involving administrative changes and one that involves a smoothing of the cliff-edge currently experienced at the threshold.

 

The most interesting options, and some threatening ones , plus the option to offer other solutions are made from page 16 onwards. This does offer us a significant opportunity to make our case. We trade B2C (Business to consumer) so the VAT element is invisible to our customers, yet it is a huge proportion of the price. Please give us your views on any proposal that you think may work, and we will work up a PASC position on this. It may of course be a simpler solution for Tourism Businesses to introduce a 5% VAT rate for businesses offering visitor accommodation. Then, whatever the threshold, the ‘cliff-face’ is greatly lessened, and tourism is given a major boost, thereby also boosting the rest of the economy.

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More details: VAT Threshold Consultation

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Input into the consultation closed on 5th June 2018. As soon as any responses are available from Government, updates will be posted both here and on Twitter

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COLLECTING TAX ON INCOME THROUGH ONLINE PLATFORMS

 

This is a very welcome consultation. We have been voicing our concerns that those that advertise through the ‘sharing economy’ platforms, primarily through the online travel agents (OTA’s) such as AirBnB are not only not meeting the same level of regulation that professional operators do, but that they are not declaring the income either.

 

The lights have finally come on in the Treasury and in their own words:

 

“The Treasury said its research showed that more than half of people using “sharing sites” did not regard the income they made as taxable. It claimed that the proposed measures would make it easier for people to fulfil their tax obligations while cracking down on a “dishonest minority”.

 

It’s quite interesting that in that simple statement they say that more than half don’t think they owe any tax, but that the measures are only focussed on a dishonest minority. We need them to focus on ALL transactions. Why should a booking via an OTA have any less tax liability than through other channels?

 

This Consultation will fit in nicely with the feedback from the APPG (All Party Parliamentary Group) into the sharing economy that we gave Oral Evidence to. We should feel reasonably optimistic that the Government is unlikely to find through this consultation that income earned through these platforms is not taxable.

 

More details: Consultation into Compliance in the Digital/Online Economy

 

Input into the consultation closed on the 8th June 2018. As soon as any responses are available from Government, updates will be posted both here and on Twitter

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INHERITANCE TAX REVIEW CALL FOR EVIDENCE AND SURVEY

 

This is also a very welcome breakthrough. Albeit that it is a consultation launched by the OTS (Office of Tax Simplification) so not as weighty as the above consultations.

 

SWTA lobbies HMRC for a fairer definition of business in a self-catering context. We believe that if a business meets the following criteria, it should still be able to apply IHT relief, as was the case before the change:

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• If the business is registered for VAT and pays HMRC VAT

• If the business is registered for Business Rates and pays Business Rates

• If the business has full time employee/s

• If the business is run for the basis of profit and pays the business tax relevant to its company structure, e.g. Corporation Tax or Income Tax etc.

• If the Business meets its responsibilities under current legislation. Gas, water testing, fire safety, access statements etc.

 

We believe that any fair review would say that any business meeting the above criteria is a business by definition.

 

The Consultation closed on the 5th June 2018. As soon as any responses are available from Government, updates will be posted both here and on Twitter.

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