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ATOL travel trust and escrow accounts

ATOL Escrow Account

The CAA’s ATOL escrow account is a simplified version of its standard full trust arrangement. It was introduced during 2020 to encourage larger ATOL holders to embrace the segregation of consumer money paid for flight inclusive travel arrangements. It works by prescribing that the balance held in the ATOL escrow account must be equal to or greater than a mandated percentage of overall funds paid by consumers for flight inclusive travel arrangements.

Serenity has unrivalled knowledge and experience in the set-up, implementation and administration of the CAA’s ATOL escrow trust account structure.

With additional support from our ATOL specialist consultants, we can provide you with an efficient and painless route to ATOL compliance.

The CAA’s standard ATOL Escrow trust deed envisages the following structure: –

  • A proportion of total funds paid by consumers for flight inclusive travel arrangements will be deposited into the trust account. That proportion will be prescribed by the CAA and is known as the ‘Agreed Protected Funds’.
  • ATOL Holder prepares a ‘Compliance Certificate’ detailing the calculation it has used to find the value of ‘Agreed Protected Funds’ as well as the cash movement through the trust account during the previous week.
  • Any surplus funds above the Agreed Protected Funds amount can be released by the trustees from the trust account on the ATOL holder making a written ‘payment request’;
  • The ATOL Holder must pay into the account any shortfall between the amount of Agreed Protected Funds and the balance on the bank account within one day of date of the compliance certificate being lodged.
  • Agreed Protected Funds are usually defined as X% of money paid for licensable sales plus Refund Credit Note values. Funds are treated as ‘paid’ to the ATOL holder two days after payment is made on a credit or debit card. Funds need not be counted after the licensable transaction has returned from travel.

This structure can act as a useful stepping stone for travel companies aiming ultimately to implement a full ATOL trust. Having appropriate trust support and guidance from trustees that understand the CAA ATOL escrow account is crucial to ease travel companies through this difficult transition. Contact us for further information.

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