A leading travel company is blaming HM Revenue and Customs for “destroying” its business and forcing it into administration.
The On Holiday Group, whose main business was acting as an accommodation wholesaler – known as a “bed bank” - has gone into administration with debts of around £7 million.
The announcement was made after talks about a possible rescue broke down.
Steve Endacott, the founder and chief executive of the group, said that HMRC was holding millions of pounds in reclaimed tax due to his firm: “The withholding of £4.5m money has effectively destroyed the OHG bed bank business.”
A spokesman for HMRC told The Independent: “For confidentiality reasons, HMRC does not discuss the tax affairs of individual companies.“
For several years, bed banks have argued with the tax authorities about where the VAT liability lies on hotel bookings through intermediaries. In a landmark Supreme Court decision this week, another bed bank scored a victory against the HMRC, but it came too late to save the On Holiday Group.
News of the collapse spread rapidly among hoteliers, who are now likely to demand payment from current guests. On Holiday Group says: “Customers will have to pay their bills in resort and reclaim the funds from our travel agency partners.”
The company says it has £19m worth of advance bookings, which it claims represents a potential profit of £600,000. But talks with other firms about a financial rescue broke down, leading to the closure.
The company says that “All monies received from agents is held in ring-fenced client accounts and will be returned by the On Holiday Group to agents in the next few days”.