Are you Financially Ready for 2026?

The 10-Point Financial and Compliance Test for UK Travel and Hospitality Businesses

The UK travel industry is recovering strongly, but 2026 will bring tougher expectations around tax, reporting, and financial transparency.
New corporate-reporting standards, digital VAT initiatives, and closer scrutiny of client-money handling mean many travel companies will face deeper financial reviews than ever before.

Being financially ready is no longer just about tidy books but it’s about showing you run a compliant, well-controlled business that can withstand audit or acquisition.

Here’s Antravia’s 10-point test to assess how prepared your travel or hospitality business really is.

1 | Beneficial Ownership and PSC Compliance

The UK’s equivalent of BOI reporting is the People with Significant Control (PSC) register, managed through Companies House.

• Are your PSC details accurate and updated within 14 days of any ownership or control change?

• Have you filed your confirmation statement this year?

• Do your internal shareholder records match what Companies House shows publicly?

✅ Small firms: keep PSC and shareholder changes logged immediately in your accounting records.
✅ Medium businesses: review PSC and group-structure disclosures quarterly to ensure inter-company control is transparent.

2 | Business Structure and Companies House Filings

Your structure affects tax, liability, and the type of financial statements you must file.

• Are you registered as a limited company, LLP, or sole trader, and does this still suit your scale?

• Have you assessed whether you qualify as micro-entity (FRS 105), small (FRS 102 Section 1A), or medium (full FRS 102) for 2025 accounts?

• Are your confirmation statements, accounts, and tax returns all filed on time?

✅ Micro or small: FRS 105 / FRS 102 1A keeps reporting lighter but still requires accurate books.
✅ Medium: adopt full FRS 102 with accrual-based statements and related-party disclosures to stay audit-ready.

3 | Accounting Infrastructure and FRS 102 Alignment

UK travel companies must produce financial statements compliant with UK GAAP (FRS 102).

• Is your accounting software configured for accrual accounting and multi-currency reporting?

• Are BSP, GDS, and supplier transactions reconciled monthly?

• Do your systems maintain digital VAT evidence under Making Tax Digital (MTD) rules?

✅ Small: Use Xero, QuickBooks, or Sage with MTD-enabled VAT filing.
✅ Medium: Map your chart of accounts to FRS 102 sections 23 (revenue) and 30 (foreign currency) for accuracy and comparability.

4 | Revenue Recognition – Agent vs Principal

Revenue recognition remains one of the most common audit issues in travel.

• Are you reporting commission-only income when acting as agent, or gross turnover when acting as principal?

• Are overrides and supplier incentives recognised in the correct period?

• Are client deposits treated as deferred income until travel takes place?

✅ Small: Recognise income only when the service is performed or commission earned.
✅ Medium: Apply FRS 102 Section 23 – Revenue, with clear disclosures for principal vs agent relationships.

5 | Client Money and Trust Accounting

Client funds are tightly regulated under both Package Travel Regulations 2018 and ABTA/ATOL rules.

• Do you operate a trust account or client money account where required?

• Are refund and cancellation procedures documented?

• Do you reconcile client balances monthly to booking systems?

✅ Small: maintain a separate client-money ledger and monthly reconciliation.
✅ Medium: appoint an independent accountant or trustee for quarterly verification of trust balances.

6 | VAT and TOMS (Tour Operators’ Margin Scheme)

VAT remains the most complex compliance area for travel firms.

• Have you reviewed your eligibility under TOMS for EU and UK holidays?

• Are overseas supplier invoices properly apportioned for margin calculation?

• Are MTD digital links in place for every adjustment?

✅ Small: use specialist TOMS-aware software (e.g. Travel VAT Tool, Xero TOMS plugin).
✅ Medium: run quarterly VAT margin reviews and maintain working-papers evidencing calculations for HMRC inspection.

7 | Payroll, IR35, and Employment Compliance

The Employment Rights Act 1996, IR35 rules, and auto-enrolment pensions apply widely across travel and hospitality.

• Are contractors correctly assessed under IR35?

• Are PAYE, NIC, and pension contributions submitted through RTI each month?

• Have you budgeted for holiday pay on variable commission earnings?

✅ Small: review contractor status annually and use HMRC’s CEST tool.
✅ Medium: conduct internal payroll audits to ensure compliance with PAYE, pensions, and visa rules.

8 | Payment Security and PCI DSS

Card-handling travel firms must meet PCI DSS v4.0 standards.

• Are you using PCI-compliant gateways such as Stripe UK, Worldpay, or Trust Payments?

• Are card refunds and chargebacks logged and authorised properly?

• Have you documented your data-security controls for annual self-assessment (SAQ A / SAQ D)?

✅ Small: route all payments through a Level-1 provider to limit PCI scope.
✅ Medium: complete annual PCI audit and ensure GDPR alignment for stored payment data.

9 | Financial Oversight and Management Accounts

Lenders and investors now expect regular reporting, not year-end surprises.

• Do you prepare monthly or quarterly management accounts with commentary?

• Are budgets, forecasts, and variance analyses reviewed by management?

• Are KPIs such as gross margin, cash conversion, and debtor days tracked?

✅ Small: review cashflow and profitability every quarter.
✅ Medium: build board-level packs and compare performance to budget monthly.

10 | Record Retention and Audit Readiness

UK law (Companies Act 2006 and HMRC Notice 700/21) requires records to be kept for six years from the end of the last company financial year.

• Are invoices, receipts, and contracts stored digitally with backups?

• Are VAT and payroll records complete and easily retrievable?

• Could you provide source data within 24 hours if HMRC requests it?

✅ Small: maintain digital copies of all supporting documents in MTD-compliant software.
✅ Medium: operate a document-management system with restricted access and clear audit trails.

Why this matters

2026 will test how well UK travel firms balance commercial agility with compliance discipline.
Small agencies that keep accurate VAT, payroll, and PSC records will avoid costly penalties and improve credibility with suppliers and lenders.
Medium-sized businesses applying FRS 102 standards, IFRS-level transparency, and regular management reporting will stand out to investors and potential buyers.

At Antravia UK, we help travel and hospitality businesses strengthen accounting systems, meet FRS 102 and TOMS requirements, and build audit-ready financial frameworks.

See how your business scores on the 10-point test at antravia.co.uk.

References

1. Companies House. People with Significant Control Guidance (2025). https://www.gov.uk/guidance/people-with-significant-control

2. HM Revenue & Customs. VAT Notice 709/5: Tour Operators’ Margin Scheme (TOMS) (2025 update).

3. HM Revenue & Customs. Making Tax Digital for VAT – Digital Recordkeeping Requirements.

4. Financial Reporting Council (FRC). FRS 102 (September 2024 edition) and FRS 105 Micro-entities Regime.

5. HM Revenue & Customs. Record-Keeping for VAT and Corporation Tax – Notice 700/21.

6. Department for Business & Trade. Employment Rights and IR35 Guidance (2025).

7. PCI Security Standards Council. Payment Card Industry Data Security Standard v4.0 (2024).

8. Civil Aviation Authority (UK). ATOL Regulations and Client-Money Requirements (2025).