Overrides are often tiered and worked out at the end of a season or year. Some are paid on all of an agent’s sales once a threshold is reached and others only on sales above it, which is why consortia and homeworking networks pool their members’ sales to reach higher tiers. Rates and thresholds are commercial and confidential, so there is no typical figure.

Example: a tour operator pays 10% base commission and agrees an extra 1% on all of an agency’s bookings in the season if its total sales pass £500,000.

VAT

HMRC’s guidance does not mention overrides by name. An override that is simply extra commission for selling is likely to follow the VAT treatment of that commission: commission for selling a UK tour operator’s packages is standard-rated and commission for arranging zero-rated passenger transport as the first intermediary is zero-rated. If you also sell your own packages under the Tour Operators’ Margin Scheme, HMRC says commission that is variable or not readily identifiable goes into your TOMS calculation. An override paid for something else, such as marketing, may be a separate supply with its own VAT treatment, so take advice. Our VAT and TOMS guide explains the rules for agents’ commission.

Worth knowing

• Usage varies. Some people use override for any bonus commission above the base rate, others only for payments based on sales volume and others for payments made to a consortium or host rather than to individual agents.

• The CMA’s 2019 principles for hotel booking sites say consumers should be told when commission affects how products are ranked.