The British tourism industry is on course to achieve a record tourist spend of £20bn for 2013, but a new European ruling could slow this momentum according to industry leaders.
Office of National Statistics figures released today (17 January) for up to the end of November 2013, suggest Britain needs just £700 million of tourist spend in the soon to be released December numbers, to hit an overall figure of £20bn - a sum never before reached in a calendar year.
Considering Britain has seen an average December spend of £1.3 billion over the last five years, this is highly likely.
The figures were hailed by VisitBritain Chief Executive Sandie Dawe as proving the organisation’s ‘GREAT campaign” is “turning spectators into visitors.”
Yet for many in the industry, celebrations will be muted.
A recent European Court of Justice (ECJ) ruling could damage this growth and force British companies to relocate overseas, says the Tourism Alliance.
The ruling states that business-to-business sales of tourism packages are now subject to a form of taxation known as TOMS (the Tour Operators Margin Scheme) whereby companies are taxed on their gross margin.
The impact of this will be to increase the prices that UK and overseas visitors pay for a holiday in the UK.
However, this tax will not apply to overseas companies that sell UK holidays. Therefore, the most likely survival route for British travel companies is to relocate overseas, taking jobs and growth out of the UK economy.
“The best people to sell Britain are the British. So the UK government must do everything it can to ensure UK companies are at least as competitive as everybody else,” says Tourism Alliance Chairman Ufi Ibrahim.
“Failure to do so will destroy British jobs and damage the economy. The current contribution of tourism is £127bn in GDP and 9.6% of total employment.”
The Alliance has asked the government to urgently review the industry’s tax structure in light of the ECJ ruling.
It is also waiting on an imminent statement from HMRC on whether the department will implement the ruling, or hold a two-year consultation period with the tourism industry, during which companies would have the chance to voice their concerns.
