The tribunal, in a case involving First Choice Holidays advised by KPMG, has ruled that package holiday discounts granted by travel agents (often without the knowledge of the tour operator) can be deducted from the operator's turnover for VAT purposes.
Chris Fyles, director of KPMG's travel industry VAT team, said: 'This is a great victory for the tour operators who will now receive refunds for the VAT they have overpaid.
'Customs had argued that VAT should be calculated according to the holiday price advertised in the brochure, but the tribunal decisions has proved the point that VAT cannot be levied on a price higher than that paid by the customer.
'Many operators have lodged claims in advance of this ruling and any who have not we advise to to do so.'
First Choice was supported by rivals Airtours, Thomas Cook and Thomson Travel.
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