Hotel chains working to correct their VAT errors

It recently came to light that several major chains for hotels in the UK were breaching VAT compliance regulations. Since this came to light, many of the chains have been working to rectify the problem, which was seen as unfair pricing for consumers.

Unfortunately, for hotels, they must list prices with VAT, meaning that the prices often compare unfavourably with other countries in Europe, which do not have to list their prices including tax online.

This means that when people are running a price comparison, they often find that hotel prices in the UK will be inflated by the addition of VAT, something that they don’t find out about in foreign hotels until they arrive at the destination.

Until recently, it was the case that many hotels were simply not listing their prices with VAT, in breach of regulations, in order to compete with European prices. This came to light after an enquiry was made by the Advertising Standards Authority, after several complaints were made about the pricing. It was recently found that the hotels were in breach of the advertising code, and that they must rectify the situation immediately.

An adjudication from the authority has stated, “The chances are that the people who are viewing the prices on the website are going to have to pay VAT, therefore listing the prices without it is misleading, and is clearly a breach of the code. We are now insisting that the hotels rectify this problem so that VAT is added to the prices.”

One of the major hotel groups that was in breach was IHG and they’ve stated that they are going to be liaising with the owners and operators of the various franchised hotels that they own around the country, in order to rectify the problem. They have stated that this could take some time however, as there are challenges posed by the software.