Hotel billback: the HMRC agreement

Hotel billback, where the payment of a business traveller’s bill is handled by a travel management company or hotel booking agency, has been overshadowed by changes to VAT legislation which could have seen corporate buyers facing sharply increased bills from 1 January. That was the date when new European VAT legislation came into force which meant that TMCs and HBAs could have been required to pass on VAT to their corporate clients, which they would subsequently be unable to claim back.

Representatives of the Hotel Booking Agencies Association (HBAA) and the Guild of Travel Management Companies (GTMC) have been lobbying HM Revenue and Customs to find a solution and an agreement was recently reached. The HBAA, for example, worked hard to make sure that whatever solution was reached should not be too onerous on corporate clients.

As a result of the agreement, billback suppliers now have to state explicitly they are working as an agent on behalf of the corporate client. TMCs and HBAs will no longer recover input VAT and charge output VAT and instead will charge a disbursement to the corporate client who will be able to recover the input VAT shown.
The agreement with the Revenue also calls for TMCs and HBAs to “identify on their invoices the hotel guest, their employer and ideally each will carry a unique reference number” (bold type ours).

Here’s where we at Conferma are able to help. Our revolutionary billback product Conferma Settlement Plan assigns a unique number to each billback booking – a virtual corporate card number - until the payment is reconciled.

Changes to tax and VAT legislation are never easy but the outcome has generally been positive. The changes will add some administrative burden to the TMC or HBA’s billback process and this may result in higher fees. However, they are unlikely to be anything like the 17.5% hike that having to pay the VAT would have meant.