Asked by: Christopher Chope (Conservative - Christchurch)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what estimate he has made of the amount of Air Passenger Duty charged by airlines which has not been refunded to passengers who did not undertake their booked flights in the last six months; and if he will make it Government policy that Air Passenger Duty should be repaid to passengers without the imposition of an administration fee.
Answered by Kemi Badenoch - President of the Board of Trade
APD is a tax paid by airlines based on the number of passengers on board an aircraft that takes off from a UK airport. Whether airlines pass on the cost of the tax to their passengers is a commercial decision. If a pre booked passenger does not subsequently fly the airline has no APD liability for that passenger. HMRC does not collect information on such passengers.Where the cost is passed on by airlines, there is no legal obligation to refund this business charge. Refunds from airlines will be governed by the terms and conditions attached to the sale of the ticket. However, the government expects all airlines operating in the UK to make their terms and conditions, including their refund policy, clear at the time of booking.
Asked by: Christopher Chope (Conservative - Christchurch)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will publish the economic impact assessment of the decision to end tax free sales for air passengers and the VAT refund scheme from 1 January 2020; and if he will make a statement.
Answered by Kemi Badenoch - President of the Board of Trade
Ahead of the end of the transition period, the Government has announced the VAT and excise duty treatment of goods purchased by individuals for personal use and carried in their luggage arriving from or going overseas (passengers). The following rules will apply from 1 January 2021:
- Passengers travelling from Great Britain to any destination outside the United Kingdom (UK) will be able to purchase duty-free excise goods once they have passed security controls at ports, airports, and international rail stations.
- Personal allowances will apply to passengers entering Great Britain from a destination outside of the UK, with alcohol allowances significantly increased.
- The VAT Retail Export Scheme (RES) in Great Britain will not be extended to passengers travelling to the EU and will be withdrawn for all passengers.
- The concessionary treatment on tax-free sales for non-excise goods will be removed across the UK.
The Government published a consultation which ran from 11 March to 20 May. During this time the Government held a number of virtual meetings with stakeholders to hear their views and received 73 responses to the consultation. The Government has also continued to meet and discuss with key stakeholders following the announcement of these policies.
The detailed rationale for these changes are included in the written ministerial statement and summary of responses to the recent consultation: https://questions-statements.parliament.uk/written-statements/detail/2020-09-11/hcws448 and https://www.gov.uk/government/consultations/a-consultation-on-duty-free-and-tax-free-goods-carried-by-passengers.
In 2019 HMRC estimate that VAT RES refunds cost around £0.5billion in VAT for around 1.2million non-EU visitors. In 2019 the ONS estimate there were substantially more EU visitors (24.8 million) than non-EU passengers (16.0 million) to the UK. This implies an extension to EU residents would significantly increase the cost by up to an estimated £0.9billion. This would result in a large amount of deadweight loss by subsidising spending from EU visitors which already happens without a refund mechanism in place, potentially taking the total cost up to around £1.4billion per annum.
The concessionary treatment on tax-free sales currently affects airports that fly to non-EU destinations. The extension of duty-free sales to EU bound passengers will be a significant boost to all airports in England, Scotland and Wales, including Edinburgh and Glasgow and smaller regional airports which have not been able to offer duty-free to the EU before.
HMRC estimate that around £150 million of VAT is not charged as a result of tax-free airside sales. As with the VAT RES, extending the relief to the EU would significantly increase the cost of the scheme and result in a large amount of deadweight loss by subsidising spending from EU-bound passengers which already happens.
The final costings will be subject to scrutiny by the independent Office for Budget Responsibility and will be set out at the next forecast.
The Government also recognises the challenges the aviation sector is facing as it recovers from the impacts of Covid-19 and has supported the sector throughout the pandemic, and continues to do so, including schemes to raise capital, flexibilities with tax bills, and financial support for employees.
Asked by: Christopher Chope (Conservative - Christchurch)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, pursuant to the Answer of 21 September 2020 to Question 90033 on Coronavirus Job Retention Scheme, whether a business that repays a furlough grant to which it is entitled is liable for tax upon that grant notwithstanding its voluntary repayment.
Answered by Jesse Norman
A business that repays a furlough grant to which it is entitled is not liable for tax upon that grant. However, the employer will still need to record the grant in their forthcoming tax return.
Asked by: Christopher Chope (Conservative - Christchurch)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will make it Government policy that businesses which voluntarily repay furlough payments to the Government are not subject to tax on those payments; and if he will make a statement.
Answered by Jesse Norman
Voluntary repayments of furlough grants are already not subject to tax because repayment is predicated on the business acknowledging that they are not entitled to the grant and will not be taxed on returning it. A business is only liable to be taxed on a furlough grant if such a business retains a grant to which it is not entitled. A business which informs HMRC of its erroneous claims or overclaims within the notification period and which voluntarily repays the grant will not be taxed on the grant.
Asked by: Christopher Chope (Conservative - Christchurch)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, for what reason his 10 July 2020 guidance to employers on individuals for whom they can claim wages who are not employees was not issued before that date; and what estimate he has made of the number of new eligible claimants.
Answered by Jesse Norman
On 10 July 2020, the guidance to employers on individuals they could claim for under the Coronavirus Job Retention Scheme was relocated within GOV.UK and the structure was updated to improve clarity.
There were no substantive content changes and therefore there has been no change in eligibility.