On Holiday Group enters administration
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On Holiday Group has entered administration with forward bookings worth GBP19 million.
Speculation was rife last night as to the future of the company, after rumours of both a collapse and takeover.
Sixty five jobs are now at risk.
Spanish website Hosteltur said Hotelbeds and Jumbo Tours has been negotiating over an acquisition of On Holiday Group, but these talks are thought to have collapsed. The report is said to be part of the reason behind the failed talks.
A statement from the group said: “The directors of OHG Accommodation Ltd have today announced that they been forced by HMRC continuing to withhold GBP4.5m of disputed Toms VAT to put the business into administration. This is because they are unable to pay all hotel bills as they are falling due and want to secure an orderly wind up of the business from a customer and travel agency partner perspective. As a result its Dubai based trading partner Euro Rooms Direct Ltd has also decided to stop taking forward bookings.
OHG has had lengthy discussions with most of the major bed banks over the last week, to try to persuade one of them to take over the client account and the GBP19m of forward bookings carrying GBP600k of profit. Again this would have minimised disruption to customers and OHG’s travel agency partners. However, we are saddened to report that only one bed bank was willing to complete a deal to help travel their travel agency partners. Unfortunately, the this deal floundered last night, because of deliberate and inaccurate leaks to the Spanish press along with legal complexities relating to the client account.”
Customers will now have to pay for bills in resort and claim refunds from agents.
On Holiday Group’s chief executive Steve Endacott also has investments in Holiday Taxis, Rock Insurance, CWT Digital, Internet Travel and Luggage Mule which have not been affected by the collapse.
Its booking websites Holiday Nights, Fresh Holidays, 118 Travel, flightandhotel.co.uk and PortAventura Holidays are also still trading.
On Holiday Group was a member of the Midcounties Co-operative consortia.
Endacott said: “The timing of the Supreme Court ruling in favour of Medhotels could not be more ironic and maddening. We are obviously glad that it gives a virtually guaranteed GBP4.5m pay out to our hotel partners, however it is likely that this will take a further six to nine months to secure from HMRC and we have had legal advice that we can not trade until this point, without going into Administration.
“I am outraged that HMRC have been able to take GBP4.5m of disputed VAT charges on a “guilty until proven innocent basis” and it has taken a ridiculous four years for to receive a Supreme court ruling that ratifies all our legal advice that we were acting correctly as the “Agent of the Hotelier” and HMRC where wrong in their stance.
“The withholding of GBP4.5m money has effectively destroyed the OHG bed bank business, since it forced us to stop selling EU VAT zone hotels and removed the working capital required to effectively operate a bed bank. We are obviously exploring the potential for a damages claim, but our lawyers advise it is very hard to secure damages against HMRC who seem to have virtually unlimited rights when you are in a VAT reclaim position.
“We have been forced to take the decision to put the company into administration due to pressure from hoteliers to make payments, which OHGA cannot do without the return of the GBP4.5m held by HMRC. Not surprisingly our hotel partners are not willing to wait up to another nine months to receive payment. Obviously, I am absolutely gutted and deeply sorry to put 65 staff at risk today”.
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