Consultants take VAT increase in their stride

TRAVEL agents are viewing
the implementation of the
increase in VAT as fairly
straightforward. The rate will
increase from 14% to 15% on
April 1.
Deanne Lester, financial
manager of Pentravel, said,
apart from a few internal
system updates to action,
she did not foresee many
issues arising from the one
percentage point increase
in VAT. She confirmed that
the price increase would
be passed on to the client.
International bookings are
mostly zero rated, with
the exception of agent
commissions and service
fees, and the increased VAT
amount would therefore only
be applied to the commission
or service fee amount.
Because consultants issue
pro forma invoices and only
convert these to tax invoices
once the client has paid them
in full, all invoices issued on
April 1, would then reflect 15%
instead of 14%.
“There may be a few quote
adjustments that would need
to be made in the first week of
April but otherwise we do not
foresee any major problems
arising,” said Deanne
Rudy Theunissen, financial
manager of Thompsons
Retail, agreed, saying the
process should be pretty
straightforward for most
bookings, with a simple
system adjustment to 15%
taking place on April 1 for all
new invoices.
Bill backs pose the only
complication that Rudy
foresees. He explained that if
a client travelled in March, the
agent would only invoice them
for the services in April and
they would then need to look
at the date when the service
was deemed to have occurred
and, in that instance, adjust
VAT levels back to 14%.
He also added that any VATregistered
business would be
able to claim the VAT back
if it was a valid corporate
expense and so companies
would not be overly affected
by the increase. Smaller, nonVAT-registered
business and
leisure travellers would need
to absorb the increase.