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CALLS FOR CLARITY OVER VAT

THERE IS WIDESPREAD confusion surrounding the application of VAT to the travel and meetings billing process, according to research among 185 buyer members of the Institute of Travel Management (ITM). The research also highlighted surprising support for the application of Air Passenger Duty (APD) - prior, it has to be said, to the announcement of the latest increases - although these were qualified by the idea that funds raised by APD should be diverted into supporting efforts to develop greener aviation.

Commenting on the results in light of recent government announcements Paul Tilstone, ITM's chief executive, said: "The taxation tool is used by government to raise revenues and/or change behaviour. The increases in APD and the fuel subsidies provided to the aviation industry suggest a confused approach which is not designed to change behaviour, rather to simply raise cash. This is particularly harsh at this difficult time for this sector. If the government had announced the increases alongside a series of investments into developing more sustainable aviation I really don't think the price hikes would cause much issue."

The research also covered the issues of VAT application and in what circumstances the tax was being applied. Colin Goldney, ITM Research's partner, suggests that the government needs to provide greater guidance on the application of VAT in the process as the results seem to suggest a varying approach.

"With respondents approximately split 50/50 on whether their service providers apply VAT to certain travel and meetings transactions, it is clear that the sector needs educating and government needs to address this issue."

As a result of the survey, ITM is now planning an event in June, which will in part focus on the application of taxation in travel and meetings management, and will be inviting a representative of Her Majesty's Revenue & Customs (HMCR) to provide clarity on the issue.