Trust accounts in the travel sector: TTC comment in The Telegraph

TTC director Martin Alcock spoke to The Telegraph about trust accounts in the travel sector and rumours that the government plan to implement new rules to speed up refunds.

Here is the full article:

Screen grab of an article from The Telegraph on refunding customers in the travel industry

The original article can be found here – https://www.telegraph.co.uk/business/2020/09/19/travel-giants-ringfence-customer-deposits-speed-refunds/.

For information on the advantages and disadvantages of trust accounts, please see here.

If you enjoyed this post, why not sign-up to our newsletter? Get our latest blog posts, industry updates and exclusive content. Join the mailing list here.

The COVID-19 crisis is rapidly evolving and the Government's response and the details of support on offer are continuously changing. We'll be updating our posts regularly to ensure our analysis and advice remains as accurate and useful as possible. To receive the very latest information as we release it follow us on LinkedIn.  If you have any questions in the meantime, please get in touch. 

Tips for renewing your ATOL licence

The deadline for submitting your ATOL renewal is fast approaching. If you are due to renew your licence this September and haven’t yet started the application process, we recommend you do this now. We are currently working on our client’s renewals and have some insight into what information the Civil Aviation Authority (CAA) require. Here are our top four tips for renewing your licence.

If you need any help applying for an ATOL licence, or have any questions about the process, please get in touch. 

f you enjoyed this post, why not sign-up to our newsletter? Get our latest blog posts, industry updates and exclusive content. Join the mailing list here.

The COVID-19 crisis is rapidly evolving and the Government's response and the details of support on offer are continuously changing. We'll be updating our posts regularly to ensure our analysis and advice remains as accurate and useful as possible. To receive the very latest information as we release it follow us on LinkedIn.  If you have any questions in the meantime, please get in touch. 

Financial tests for ATOL licences

The Civil Aviation Authority’s (CAA) approach to financial assessments largely depends on the size of the ATOL licence required. As the licence size increases, so does the potential exposure to the Air Travel Trust Fund. Therefore, the CAA requires larger businesses to provide more financial information than smaller ones. This diagram demonstrates the commonly requested information needed by the CAA for September 2020 renewals. It takes into account the additional information required due to Covid-19.

If you need any help applying for an ATOL licence, or have any questions about the process, please get in touch. 

If you enjoyed this post, why not sign-up to our newsletter? Get our latest blog posts, industry updates and exclusive content. Join our mailing list here.

The COVID-19 crisis is rapidly evolving and the Government's response and the details of support on offer are continuously changing. We'll be updating our posts regularly to ensure our analysis and advice remains as accurate and useful as possible. To receive the very latest information as we release it follow us on LinkedIn.  If you have any questions in the meantime, please get in touch. 

Brexit: six areas of your travel business that are likely to be impacted

It may have been pushed to the back of our minds by a worldwide pandemic, but sadly, Brexit and its many related challenges have not gone away.

The UK officially left the European Union (EU) on 31 January 2020, entering a transition period which is scheduled to last until 31 December 2020. Both sides are currently in the process of negotiating a new trading relationship.

Whatever the outcome of the next few months’ negotiations, there will be challenges for the travel industry, and your business may have to adapt. Here are six key areas that are likely to be impacted: 

1 – Employees

Worker’s rights will feature heavily in any trade deal, and if you employ EU nationals in the UK, or you post UK workers to EU countries, new rules are likely to affect you. 

We understand many EU member states have put processes in place to allow UK citizens to continue to work if no trade deal is agreed. However, there may be restrictions on the length of time workers would be allowed to stay in an EU country. 

Furthermore, any new agreements for workers’ rights are only likely to apply to those living and working in the country before Brexit, which may present issues for seasonal workers. 

Similarly, the recent UK Immigration Bill introduces a series of restrictions on companies rights to employ non-UK workers. In particular, the salary threshold of £25,600 is likely to capture a higher proportion of roles in the travel sector compared to many others and could lead to a shortage of suitable candidates. 

2 – VAT

The Tour Operator Margin Scheme (TOMS) is an EU-wide simplification measure that means EU tour operators don’t have to register for VAT in every member state in which they operate. 

We understand that any trade deal would likely preserve the current system. However, in the event of a no-deal Brexit, HMRC has proposed to change the rules, making travel services to all destinations outside the UK (including the EU) zero-rated. The good news is that only the margin on UK travel services will be subject to VAT, which could result in significant savings for many outbound tour operators. 

However, EU member states will likely require UK operators to separately register for VAT in each territory in which they operate, which would present a significant administrative burden for many travel companies.

 3 – Key information 

Under the Package Travel Regulations, package organisers must provide accurate information to customers on various matters including passports, visa requirements, healthcare support. 

Passengers travelling after 1 January 2021 are likely to need at least six months remaining on their passport.

We understand UK travellers will still be allowed to visit EU countries for up to 90 days without a visa, but only if the UK continues to grant reciprocal rights to EU citizens visiting the UK. 

Though unrelated to Brexit, from 2022 all visitors to the EU will need to complete an application through the EU Travel Information and Authorisation System (ETIAS) and pay a fee before entering the Schengen Area. This will even include citizens of countries with a visa-free travel agreement in place. 

It is still unclear what arrangements will be in place for UK nationals should they need access to health care when in an EU country. If the EHIC card is no longer valid when we leave the EU, you will need to make sure you direct your customers to the correct advice.  

You must ensure that you have systems in place to monitor any changes to these information requirements, and to inform your customers where necessary. 

4 – Flights 

In a post-Brexit world, airlines may need to ask for permission to fly into EU air space, and airlines based in the EU will have to do the same when flying into the UK. This could present challenges if permission isn’t granted on time. 

The current transition arrangements allow flights between the UK and the EU to continue as they were. What happens beyond 31 December 2020 is still being negotiated. 

5 – Regulation and licensing

Under the current European regulatory framework for selling package holidays, companies who are established and compliant with the rules of one EU member state can sell holidays in every other EU member state.  

Non-EU companies must comply with the rules in each and every member state in which they sell holidays. 

Once the UK falls outside of these rules, many companies are likely to require a change to their current licensing arrangements following the end of the transition period. For example: 

    • EU established firms wishing to sell flight-inclusive holidays in the UK from 1 January 2021 are likely to need to hold their own ATOL.
    • UK established firms wishing to sell holidays in the EU will need to either create a new subsidiary place of establishment in an EU member state or register with the financial protection scheme of each member state in which they operate.   

 

In addition, if you use insurance bonds to meet your financial protection obligations, then you should also check with your insurer or insurance broker that they can continue to issue valid bonds following the end of the transition period. 

6 – Foreign currency

The Pound Sterling has been on a volatile rollercoaster ride ever since the UK voted to leave the EU in 2016. Its value has fluctuated dramatically with each twist and turn of the withdrawal process, and it remains impossible to predict.

As the trade negotiations proceed, we expect this pattern to continue. Travel companies must have a robust strategy in place for managing their foreign currency risk. 

There are still many unanswerable questions at this stage. Through the continuing negotiations, we’ll be providing updates, analysis and insight on our website and through our social media channels. If you need support in the meantime, please get in touch.

If you enjoyed this post, why not sign-up to our newsletter? Get our latest blog posts, industry updates and exclusive content. Join the mailing list here.

Guidance on Brexit is continually being updated as we progress through the transition period. We'll be updating our posts regularly to ensure our analysis and advice remains as accurate and useful as possible. To receive the very latest information as we release it follow us on LinkedIn. If you have any questions in the meantime, please get in touch. 

The September 2020 ABTA and ATOL renewal process

If you’re an ABTA member or ATOL holder and are due to renew your licence or membership this September, we’ve put together three areas that may want to think about whilst going through the process. In this video, TTC Director Simon Brodie gives his thoughts on the criteria requirements, including the balance sheet impact of the Thomas Cook failure and Covid-19. He also discusses the impact of Brexit and what you need to think about in relation to bonding. 

If you need any help renewing, please get in touch. 

If you enjoyed this post we think you’ll love our newsletter. Get our latest blog posts, industry updates and exclusive content. Sign up here.

Preparing for Brexit

The UK officially left the EU on 31 January 2020 with the withdrawal process due to last until 31 December 2020. During the current coronavirus pandemic we know that Brexit is not at the forefront of everyone’s minds, however sadly the challenges it brings for the travel industry have not gone away. Below we have outlined some key considerations to help ensure your business is ready.

Infographic showing the impact of Brexit on the travel industry

If you enjoyed this post we think you’ll love our newsletter. Get our latest blog posts, industry updates and exclusive content. Sign up here.

Guidance on Brexit is continually being updated as we progress through the transition period. We'll be updating our posts regularly to ensure our analysis and advice remains as accurate and useful as possible. To receive the very latest information as we release it follow us on LinkedIn. If you have any questions in the meantime, please get in touch. 

Bounce Back Loan Scheme (BBLS) – updated on 4 May 2020

On 27 April, the government announced a Bounce Back Loan Scheme for small and medium-sized businesses based in the UK, who have been negatively affected by coronavirus. This could be a potential lifeline for some travel companies as the government has said the cash will be accessible within days of having your application approved. Now that the scheme has been launched, we have pulled together the key facts about the loan to help you decided whether to apply.

Bounce Back Loan Infographic

SMEs can borrow between £2,000 to £50,000 and the loan will be 100% guaranteed by government. We understand that companies won’t be charged any fees or interest, the loan terms will be up to six years with no repayments needing to be made in the first 12 months, and we expect there to be a low interest rate for the remaining period.

The loans will be delivered through accredited lenders however it is worth noting that if you have already been accepted for a CBILS loan, you aren’t able to also apply for this. If you already have a CBILS loan of up to £50,000 then you can transfer to a Bounce Back Loan by 4 November. To do this, please get in touch with your lender.

Banks, insurers and reinsurers are unable to apply however insurance brokers are eligible. Public sector bodies and state-funded primary and secondary schools also can’t apply, neither can any grant-funded, further-education establishments. You can only apply if your business was not an, ‘undertaking in difficulty’ on 31 December 2019.

How to apply – please speak to your lender who will provide you with an application form.

If you have any questions, feel free to get in touch. 


The COVID-19 crisis is rapidly evolving and the Government's response and the details of support on offer are continuously changing. We'll be updating our posts regularly to ensure our analysis and advice remains as accurate and useful as possible. To receive the very latest information as we release it follow us on LinkedIn.  If you have any questions in the meantime, please get in touch. 

Making a claim for furloughed employees: practical tips

The job retention scheme is now live and you’re able to make your claims for furloughed employees. In this video Adam Pennyfather talks through some first-hand, practical tips to help make the process easier.

Adam discusses the Government gateway ID, what information you’ll need and how to fill out the forms, as well as providing some guidance on turnaround time.

The COVID-19 crisis is rapidly evolving and the Government’s response and the details of support on offer are continuously changing. We’ll be updating our posts regularly to ensure our analysis and advice remains as accurate and useful as possible. To receive the very latest information as we release it follow us on LinkedIn. If you have any questions in the meantime, please get in touch.

CBILS part 2: recent developments

In this second part of our CBILS video series,  Adam Pennyfather gives an update on the scheme now that it has been running for a few weeks. He takes a look at the following areas:

Criteria | Security | Information required | Indicative rates | Timing of applications 

The COVID-19 crisis is rapidly evolving and the Government's response and the details of support on offer are continuously changing. We'll be updating our posts regularly to ensure our analysis and advice remains as accurate and useful as possible. To receive the very latest information as we release it follow us on LinkedIn.  If you have any questions in the meantime, please get in touch. 

Five steps to a smoother ATOL renewal

The March ATOL renewal process is now firmly underway.

The hard yards were done in 2018 when the ATOL Online Portal was used for the first time and the CAA should now hold an accurate record of the corporate structure of each licence holder. This leaves updating financial results, adjusting business profile assumptions and setting out your licence limit requirements for the year ahead to kick off the renewal process.
However, following the failure of Thomas Cook (TC) in September 2019 we do envisage increasingly challenging conversations in the weeks and months ahead particularly for businesses looking to obtain bonding lines through the insurance markets or those struggling to replace the distribution or supply provided by TC.

To help you, here are five important steps towards a smooth renewal.

1. Self-assess yourself against CAA criteria

The days of performing a quick piece of arithmetic to calculate your free asset position are now over. There’s only one way to know for sure if you pass the CAA’s financial requirements and that’s to submit a self-assessment.

If you’ve passed before and have equally strong financial results this year you might assume this step isn’t necessary. However, if you’re focusing too much on the bottom line of your P&L and not watching your leverage multiple then you could be in for a nasty surprise.

After you’ve submitted your assessment, you’ll hopefully receive an email advising that the computer says Yes! If not, you’ll be told the cash improvement required. At this point you’ll need to engage with your shareholders to determine how this can be fixed and how soon. Whatever your plan, you should act fast. Bad news isn’t wine. It does not get better with age.

Access the self-assessment documents

2. Managing your ATOL Online account

2018 saw the launch of the new licensing portal ‘ATOL Online’, the product of several years of graft from the CAAs Consumers & Markets Group. The launch was not without its problems, but the improvements made since are clear to see.

Previously you might have delayed drafting your application until your statutory accounts were available on the basis that it was not possible to reach the end of the ATOL application form without the figures from your accounts. A welcome reshuffling of the application pages has meant that you can now validate and update ownership details of your business and any parent entities, as well as providing other business profile information, such as key supplier data and save the form to the point that it is only your financial information outstanding. So it’s a good idea to prepare this data and just drop in the information from your statutory accounts when it’s ready.

You should also carry out general housekeeping of your account, including checking the individuals nominated as your ‘Accountable Person’ and ‘ATOL Reporting Accountant’, so automated messages are sent to the correct personnel.

3. Setting your licence limits

Businesses renewing this March are typically doing so for a 12 month licence expiring on 31 March 2021. The implementation period covering the UK’s exit from the EU – and where existing ATOL regulations will remain unchanged – is proposed to come to an end on 31 December 2020. Travel businesses currently selling packages to EU consumers will be able to continue protecting those travellers under their ATOL until this implementation period comes to an end. Subject to the conclusion of negotiations, it is possible that the final quarter of the next licence period will fall after the end of the implementation period so companies using their licence to sell packages into the EU will be unable to do so for new bookings from 1 January 2021 onwards which is something to be mindful of when setting licence requirements.

4. Pre-empt the renewal conditions

The Holy Grail is to receive a renewal offer simply asking for payment of administration fees. If you’ve a direct debit in place with CAA these can be paid straight away. Job done.

However in reality you may need to fulfil other licensing conditions, such as updated deed of undertakings and supplying fresh bonds, to renew on time. Why not take steps to put these in place when you submit the application itself? Additionally, with the insurance market incurring substantial losses from the failure of Thomas Cook, if you know your licence is subject to a bond then you need to be speaking to your underwriters very early on to ensure the required capacity is there. A stitch in time….

5. Timing

To avoid the inevitable bottleneck the CAA awards a fee reduction if you fully submit your renewal application at least 8 weeks before the expiry and this milestone is rapid approaching. So the sooner you implement all of these steps the better.

After all, the last thing you want is to find yourself grovelling to your Audit Manager to push through the AARs, or to an Underwriter to offer bond renewal terms. Getting on with the process right now will really pay dividends.

Travel Trade Consultancy provides advice, services and support to businesses in the travel sector specialising in matters related to ATOL. Why not join over 100 other ATOL holders and let Travel Trade Consultancy handle your renewal for you?

Find out more

Brexit: a ferry good reason to check your T&Cs

If anyone needs to book a holiday this January, its poor old Chris Grayling.

The Transport Secretary has been no stranger to catastrophy during his time in office but the latest effort plumbed new depths.

Tasked with arranging  additional contingency ferry capacity to enable us to import enough food in the event of a no deal Brexit come March 29th, his department awarded a contract to Seaborne Freight, a firm without any ships. Grayling’s confident insistence that they would nevertheless be fully prepared was somewhat undermined when it was revealed that Seaborne Freight had copied their business Terms and Conditions from a takeaway company.

If you were trying to write the perfect metaphor for our government’s handling of Brexit, you couldnt do much better than this. It’s another clear example of the lack of any kind of plan. Unless of course, the plan is to ward off a UK famine by ordering a giant Deliveroo from France.

The debacle also highlights a murky practice which we see all too often in the travel sector. The cutting and pasting of T&Cs.

Many travel companies (including some large ones who really should know better!) will happily copy their T&Cs from an unmodified, off the shelf template or from a competitor in order to save a few quid in legal fees.

Needless to say that such thrift is a false economy and can come back to bite with a vengence. Your T&Cs are your first line of defence against any kind of claim from your customer. They usually need tailoring so that they accurately reflect how your business operates in practice. Heaven forbid you find yourself up in the docks, trying to defend your cancellation policy as industry standard when your contract actually says “Delivery in 30 minutes or it’s free”.

If that wasn’t a good enough reason, consider that in 2018 an unprecedented number of new regulations came into effect.  We were force fed an Alphabeti Spaghetti of new acronyms like PTRs, LTAs,  PSD2, and GDPR that were as unappetising and as they were tricky to untangle.

These new rules wrought profound changes to the way many travel businesses operate, affecting how they collect payments, protect customers, process data and charge for cancellations.

If you’re looking for a new year’s resolution, then reviewing your T&Cs would be a good place to start. Coincidentally, my new year’s resolutions is to cut down on takeaways. Happy new year!

 

Written by Martin Alcock for TTG Magazine’s 10 January 2019 edition.

Getting through the September ATOL renewal

No matter how old I get, the start of September will always retain a “back to school” feel about it. After a long summer holiday, the start of term was a day of mixed emotions. Old friends and new pencil cases. Heavy backpacks and writing cramp.

 

For the travel sector returning from holidays this week, there’s also a packed timetable to deal with. After trying to remember their passwords, one of the first tasks will be renewing their ATOL and ABTA licenses.

 

Leaving renewals till September is always a bit risky. The equivalent of doing your homework the night before term starts. However, this year there are some added complications that mean you can’t just copy what you did last year on the morning bus.

 

Firstly, the CAA has a new IT system to contend with. After running some sample tests last March, all ATOL holders must renew their applications online. The CAA are using the new IT system as an opportunity to cleanse all of the information they hold on ATOL holders, and so none of the old historic data has been transferred over. You will therefore need to locate a lot of detailed information on your company, directors and shareholders the first time you log on. Its definitely not a quick process, so be warned.

 

Secondly, there is a new set of rules to contend with, after the new Package Travel Regulations came into force, and the ATOL Regulations were updated in July this year. The wider definition of a package may mean you need to protect more bookings this time round. Meanwhile, the new “place of establishment” rules mean that you may need to include your European Package sales on your UK licence.

 

In both cases, you may need a licence for a larger amount of revenue, which may mean you need to inject more cash into your business or provide bonding or other security.

 

If your company is established overseas, you might find you have a different problem. The CAA are refusing to renew ATOLs from companies who are not established in the UK. Instead they must protect their UK package sales in the country where they are based. We’ve already seen several examples, leaving the companies affected with no UK licence and some serious legal and commercial issues to contend with.

 

Renewing your licences is a bit like the blister from your new school shoes. You know it has to happen. You know it will be painful. You just have to get through it. Good luck.

Travel Trade Consultancy provides advice, services and support to businesses in the travel sector specialising in matters related to ATOL. Next time, why not join over 100 other ATOL holders and let Travel Trade Consultancy handle your renewal for you? For more information, contact us.

Written by Martin Alcock for TTG Magazine’s 6 September 2018 edition.

 

Last minute ATOL renewals and how to avoid “The List”

We have entered the business end of the ATOL renewal, and the deadline for travel firms to satisfy any final requirements, and renew their ATOL is just a frantic few weeks away.

From 2018, all ATOL renewal applications must be made through the CAA’s ‘ATOL Online’ system. By now, you should hopefully have completed the online application and be well on your way to renewing. If not then you had better get started!

Those who don’t renew on time face the very public humiliation of a period on the late renewal list- the CAA’s equivalent of the naughty step which is published on the CAA’s website for all to see.

At best, being on “The List” is an irritation you can do without. At worst, the resulting brand damage can knock the confidence of your suppliers and customers and really hurt your company.

Here, Travel Trade Consultancy Director and ATOL expert, Simon Brodie gives you 5 essential tips to help you renew on time and avoid finding yourself on The List.

1. Read and re-read your offer letter

If you’ve submitted your online application already, you should shortly receive a letter from your case officer setting out the terms you have to meet in order to renew your ATOL on time.

Make sure you read and re-read the offer letter and understand precisely what the CAA are asking you to do:

– Do you have to provide a bond?

– Do you have to inject fresh capital into your business? 

– Do you need to pay fees or will they be collected by Direct Debit? 

– Does your accountant need to submit Annual Returns? 

– Are you being offered a 6 or 12 month licence?

Your ATOL will only be renewed when you have satisfied all of the conditions outlined on the offer letter.

2. Get Proof of delivery on everything

Whilst certain documents can be submitted by email, the CAA will want to see original versions of bonds, guarantees or other legal documents.

The postal service can be unreliable and the CAA’s own post room starts to resemble the baggage reclaim area at Stansted Airport during the renewal period.

At TTC, we always hand deliver all of our clients’s documents or send them by recorded delivery or courier so there is indisputable evidence when something has been delivered.

3. Don’t forget to pay your fees

Your renewal fees must be in the CAA’s pocket before they will renew your ATOL – unless you’re already signed up to pay by Direct Debit, in which case well done you! Your fees will be collected the week after renewal.

Paying by Direct Debit is undoubtedly the best way to go because it reduces the hassle factor and costs you less -the CAA charges a lower fee if you pay both your renewal fees and your ATOL Protection Contributions (APC) by Direct Debit. If you want to sign up, you can obtain the necessary forms from your usual contact at the CAA.

If you don’t fancy DD we always advise our clients to pay by bank transfer and obtain proof of payment. Whilst cheque payments are still accepted by the CAA they can and do go missing. Plus they’re a bit 1980s.

4. Don’t assume. Get confirmation

The CAA do not automatically confirm when you have satisfied all of their renewal conditions but if you ask politely, your case officer will be able to update you.  You should also keep an eye on the status of your application on the portal and look for those magic words “Application Granted”.  

This is particularly sensible if you are relying on third parties such as your insurers to provide bonds or your accountant to provide independent confirmations.  If there is any delay in seeing this status change you should follow up with those third parties.  Providing all documents remains your responsibility and many ATOL holders have come unstuck because they assumed documents that were sent would arrive on time. Remember the old saying about “mother assumption” and her children.

5. Check the list

The CAA publishes “The List” on its website on 1 October and 1 April so if you really want to go belt-and-braces, check your company name isn’t on it. There have been instances in the past where companies thought they had met the conditions only to find out they hadn’t when it was too late.

If you do find yourself on The List, you should speak to your case officer to understand what you need to do to get off it as quickly as possible.

Travel Trade Consultancy provides advice, services and support to businesses in the travel sector specialising in matters related to ATOL. Next time, why not join over 100 other ATOL holders and let Travel Trade Consultancy handle your renewal for you? For more information, contact us.