British Revenue and Customs authorities this week reversed a policy that would have caused headaches for U.S.-based companies filing value-added tax reclaims on behalf of their travelers. Slated to take effect on Jan. 1 but now nullified, the proposed rule change would have mandated companies file for hotel VAT reclaims using a company address, not one of the traveler, as firms most often use.
In a bulletin released today, U.K. authorities said the rule change would most affect companies filing for hotel tax reclaims, yet the reversal came on the heels of industry pressure.
"We have received representations that the proposed changes—particularly in relation to hotel expenses—would make it very difficult for overseas companies and the hotel sector to satisfy the basic invoicing requirement so overseas companies would be able to recover the VAT they incur in the U.K.," HM Revenue & Customs said in a statement.
In a memo sent today to clients, VAT-reclamation vendor Meridian lauded the reversal, claiming the proposed policy would have substantially raised the cost of doing business in the United Kingdom.
"If implemented as intended, international companies investing or doing business in Britain would suffer substantial reductions in their VAT refunds, thereby raising the cost of doing business in the U.K. by up to 17.5 percent," Meridian CEO Mark O'Riordan told customers in the memo.