Avios snags

Owned by International Airlines Group (IAG), parent company of British Airways, Avios is under investigation by His Majesty's Revenue & Customs (HMRC) for its Value-added tax (VAT) returns, dating back to the start of 2018.
Head for Points (HfP), owner of Business Travel News, has run a detailed report, gleaned from AIG’s first half financial results which might have serious implications for the future.

IAG is not commenting on the issue and the statement itself could have been much clearer.  

HMRC’s view asserts that the charges made by IAG Loyalty are for participating / membership in the Avios scheme and the associated charges and are subject to VAT.  At first Avios was purely available for flights which are not taxable in terms of VAT, but now includes a whole variety of add-ons.

HfP seems to think that the expansion of Avios into non-flight earning and non-flight spending is coming home to roost. IAG is confident that it has followed the correct rules with regard to VAT and states “the Group does not consider it appropriate to record any provision for this case at June 30, 2023”, but at the same time adds “any potential payment may result in a material cash outflow from to the Group.”

www.headforpoints.com/2023/07/29/avios-group-under-investigation-by-hmrc

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