Firstly, given that the Education Act 1996 makes parents responsible for the education of their children, and not the schools, it is clear that ultimately it is the parents' duty and responsibility to provide their children with an education. If the parents consider that taking their child out of school for a week is still fulfilling this duty and responsibility, by law, the school cannot override this decision. It should not be penalised by a fine because the letter of the law says that it is the parents' responsibility, hence choice:
Section 7 of the Education Act 1996 applies to England and Wales:
Compulsory education
7: Duty of parents to secure education of children of compulsory school age
The parent of every child of compulsory school age shall cause him to receive efficient full-time education suitable—
a: to his age, ability and aptitude, and
b: to any special educational needs he may have, either by regular attendance at school or otherwise.
Generally, otherwise has been taken as "home education or home schooling". However, as it is not specified further, otherwise can be taken as "education" through a holiday, attending social and cultural celebrations and ceremonies (i.e. weddings, etc).
I would also like to highlight the terrible example secondary and primary schools set giving prices for attendance, as if simply "being" present in class makes people learn, diminishing the effort and work students need to actually improve and learn. Also, punishing students who fall ill or suffer from chronic illnesses.
Another issue we should consider is the fact that this current epidemic of school absences due to holidays would probably not occur if people in general had not lost their faith in the school system. Let's be honest, when it comes down to it, most people don't really think missing a week is very important. It is not because they don't care about their children education, but because most of us are wise to the amount of time wasted by staff at schools monitoring school uniforms, giving out books, gluing photocopies on books, dealing with behaviour issues...
On the other hand, if the government applied some of the good techniques used in most other countries, namely made teachers be transparent with what students are learning, have clear textbooks, let students take their work home everyday, families would be able to help students catch up during "holidays" without having the school staff recite the same mantra: for so many hours missed then you will drop so many points in your GCSEs...