2014 CONSULTATION : REBALANCING ATOL
The CAA has recently issued a Consultation, a copy of which can be viewed at http://www.caa.co.uk/docs/33/CAP%201190%20Rebalancing%20ATOL.pdf
THE PROPOSALS IF IMPLEMENTED would have most effect on future NEW ATOL licence applicants, especially those that would currently benefit from the Small Business ATOL (SBA) scheme which would be withdrawn.
The proposals also significantly affect current SBA holders and Standard ATOL holders to a lesser degree.
IF YOU ARE THINKING OF APPLYING FOR A NEW ATOL LICENCE IT WILL PROBABLY BE BENEFICIAL TO DO SO BEFORE 1 APRIL 2015 AS CURRENT BOND REQUIREMENTS ARE EXPECTED TO APPLY FOR ALL APPLICATIONS RECEIVED BY THE END OF MARCH 2015. ADDITIONALLY ANY REQUIREMENT FOR AN INCREASE IN PAID-UP SHARE CAPITAL WILL BE PHASED-IN OVER THREE YEARS. PLEASE CONTACT US AS SOON AS POSSIBLE TO DISCUSS THE ADVANTAGES OF APPLYING FOR A NEW ATOL LICENCE NOW IN LIGHT OF THE CONSULTATION PROPOSALS.
Below we have highlighted the main implications of the current proposals for POTENTIAL NEW ATOL holders and EXISTING ATOL holders:
POTENTIAL NEW ATOL HOLDERS:
Under the current proposals the Small Business ATOL scheme would be withdrawn, resulting in all new applicants – CURRENTLY EXPECTED TO APPLY TO THOSE SUBMITTING APPLICATIONS FROM APRIL 2015 – needing to meet the same requirements
- All new applicants would pay the existing Standard ATOL licence fees - the initial licence fee is currently £1,890 + 11.85p for each ATOL pax forecast under your licence. (Currently the SBA new applicant fee is £1,115)
- All new applicants would be required to have a minimum paid-up share capital (PUC) requirement of £50,000. (Currently there is no minimum PUC requirement for SBAs and a minimum PUC for Standard ATOLs of £30,000)
- All new applicants would need to provide a bond in their first year relating to 15% of their projected ATOL turnover, reducing to 12.5% in their second full year and 10% in their third full year - subject to a minimum each year of £75,000. (Currently SBA bonds are a set amount of £40,000 reducing by £10,000 after each full year and Standard ATOL bonds reduce from 15% to 12.5%, to 10% and 7.5% after each full year subject to minimums of £40,000, £30,000, £20,000 and £10,000).
- All new applicant accounts would need to meet certain financial ratios relating to profitability, liquidity/cashflow and financial stability/solvency – details of which have not yet been provided. (Currently SBAs are not even requested to provide a copy of their accounts to the CAA, Standard ATOLs need to meet just a ‘free asset test’)
- ATOL Annual Accountants Reports would need to be completed by accountants/practices who are ‘Licenced Practitioners/Practices (ATOL reporting)’ (Currently Annual Accountants Reports can be signed-off by any suitably qualified accountant)
EXISTING ATOL HOLDERS:
SMALL BUSINESS ATOL (SBA) holders
The removal of the SBA scheme
Existing SBA licence holders would have the option of:
Either: Becoming a Standard ATOL holder
- The renewal application fee would rise, currently from a minimum of £640 to a minimum of £1,045 + 11.85p for each ATOL pax forecast under their licence
- Paid-up share capital would need to increase to a minimum of £50,000 – phased-in over a 3 year period
- The business would need to meet certain financial ratios relating to profitability, liquidity/cashflow and financial stability/solvency – details of which have not yet been provided
Or: Join an Accredited Body or Franchise
- This would result in a loss of your own ATOL licence and number
- Currently all of the Accredited Bodies and the only Franchise require all monies to be paid into a Trust Account materially affecting cashflow
- Restrictions on suppliers
STANDARD ATOL holders
An increase in the minimum level of required Paid-up Share Capital from the existing level of £30,000 to £50,000
The need to meet additional financial ratios relating to profitability, liquidity/cashflow and financial stability/solvency – details of which have not yet been provided
ALL ATOL holders
ATOL Annual Accountants Reports would need to be completed by accountants/practices who are ‘Licenced Practitioners/Practices (ATOL reporting)’
HOWEVER, AT THE MOMENT THE PROPOSALS ARE JUST THAT, PROPOSALS. THIS IS YOUR OPPORTUNITY TO HAVE YOUR SAY AND HOPEFULLY INFLUENCE THE OUTCOME OF THIS CONSULTATION
Having issued the consultation the CAA would like to hear from all interested parties. At the moment they are purely proposals, it is NOT a ‘done-deal’. If you do not reply it will be assumed that you are happy with the changes that are proposed. Whilst in the consultation document there are a series of questions that the CAA would be interested in receiving your response to, you are also more than welcome to just comment on one or two of the proposals or to make a general comment. If enough businesses make their thoughts heard it is possible that some or all of the proposals will be ‘watered-down’ or abandoned, this will not happen if only a few businesses respond.
If, however, you have any particular queries you would like to discuss with us before submitting your response please do contact us by email email@example.com or by telephone 01252 795200.