VAT is a tax levied by U.K. gov which is collected at source by a third party , ie The holiday company or hire yard , shop , tradesman etc etc ,if the level of vat is reduced then the respective agent has no right to keep monies that were in effect never theirs .
When customers paid for their holidays they were subject to x pounds plus vat and if they paid vat at 20% they are legally entitled to a return of the tax reduction given, any retention of these funds I am in no doubt is illegal .