Remove VAT on Air Ambulance charity Fuel bills

[Ken sharpe]

Hi Guys and ladies I need your help please. I have been campaigning for the last few months to get the VAR returned to the Air Ambulance charities, unlike the RNLI the air ambulance charities do not get an exemption from VAT on their fuel bills.
On Friday 10 02 2012 I opened an E-Petition and I need 100.000 signatures to get the issue debated in the house of commons. If you could sign the petition and also post the link up on any other forums and web site you frequent that would be great.
Return VAT on Air Ambulance fuel payments. - e-petitions (http://epetitions.direct.gov.uk/petitions/29349)
If you require any further information please don't hesitate to contact me :ok: also if the forum management could make this sticky that would also be very much appreciated. :uhoh:

With thanks
Ken Sharpe.

[206 jock]

Great idea. I'm a trustee of an Air Ambulance charity and this subject came up only yesterday in discussion.

I've spread to the Flyer, Disco3 and the Saracens supporters forums - interesting mix of interests! - and to FaceAche.

[toptobottom]

Excellent idea - I hadn't realised it wasn't already exempt... Also spread the news on FaceTube and LinkedIn :ok:

[Art of flight]

A couple of questions Ken,

What rate of vat are you paying?

Are you asking for the relevant charity to reclaim the vat or the commercial operator acting on behalf of the charity?

I ask as I once worked at a police ASU that helped out an air ambulance with (free) fuel when the local SAR flight couldn't help. This then became a bit of a habit until it was pointed out that we didn't pay vat on our fuel so couldn't give it away to a party liable for vat (however we might want to!) and that the recipient of the tax payers generosity was in fact a commercial operator acting on behalf of the charity, but possibly not passing on the 'free' fuel to the charity....

Good luck with your quest, if the airlines don't pay it why should a charity AOC.

[Landroger]

Already done off the Land Rover UK forum. :) (Why does it do that? We are not interested in very bad, East German grot boxes.)

Roger.

[jabird]

Good luck with your quest, if the airlines don't pay it why should a charity AOC.

That is the complaint of the green lobby, anti airport groups and so on. If HMRC could levy VAT on jet fuel, I'm sure they would. People say airlines don't pay, but don't trains effectively use red diesel?

Where is the line drawn - if the helicopter offered scheduled services (eg BIH to Scilly Is) - would it be exempt too? I know GA pay.

[Helinut]

Ken,

I think most of us (in the UK) would think your suggestion is a good one, in principle. However, how are you going to suggest that the exemption deals with HEMS operated by commercial operators (which is most UK HEMS)?

Don't go suggesting to the government something that the "poor overworked" tax collectors could/would have difficulty with.

[chopjock]

I pay vat on my fuel then claim it back at the next quarter. Or am I missing something?

[Ken sharpe]

Let me just say guys
I don't work or have anything to do with ANY of the Air Ambulance charities so any answer's I give are from good but second had sources.
In answer to Art of flight,
1. I am told they pay full VAT on the fuel bill.
2. It would be the charity that was given the exemption, if they were to use contractors that would have to be taken into consideration.
3. I could not possible comment only to agree with you that it is ridicules that if someone wanted to give them a few thousand liters of fuel the charity would have to pay the VAT on it.

Hope this helps.

[206 jock]

Art

5% VAT is payable. Not the end of the wold but as Mr Tesco says....

Different charities operate in different ways. The charity I work with buys its own fuel

Chopjock

AA charities do not 'sell' anything, so are not entitled to register for VAT.

Here's some weasly guff to raise your hackles on a Sunday morning.

PMQs: Why do UK's air ambulances pay VAT on fuel? (04May11) - YouTube

[homonculus]

But why fuel? In the UK huge swathes of medical care are provided by charities and many of them are even more precarious than air ambulance charities. The VAT bill for many is a far higher proportion

Personally I believe healthcare should be properly provided and that health charity like alms houses and prison for debtors belong in the past. But we have to deal with reality

If you campaign for VAT relief for health charities you would engage the support of massive charities and powerful individuals. I just don't see why this is a special case

[Ken sharpe]

Thanks for that 206 Jock I saw that bit of You Tube when I was researching this issue and it was one of the things that pressed my buttons and got me started, that and Lord Sassoon say that AA Charities "Do not have to pay VAT on any medication they buy" Live in the real world Lord Sassoon THEY ARE GIVING IT AWAY! And supplying you with a FREE service that the NHS should be supplying.

[Bravo73]

Good luck with your quest, if the airlines don't pay it why should a charity AOC.

The reason why the HMRC don't charge the airlines VAT on their fuel is quite straight forward. If the HMRC was to (unilaterally) charge VAT then the airlines just wouldn't bother to buy fuel from UK airports. They would just tank it in with them from elsewhere.

It's nothing to do with 'fairness', I'm afraid. I'm sure that the taxman would love to get his hands on that extra revenue.

[FairWeatherFlyer]

I was about to wade through this

HM Revenue & Customs: VAT guidance for charities and not-for profit organisations (http://www.hmrc.gov.uk/charities/vat/index.htm)

are there any experts out there who can summarise all the pertinent issues on this one?

I've only read about the UK private school / charity / vat thing in the past but that's rather different.

[Whirlygig]

The salient point, is that medical supplies and services are VAT exempt and therefore, VAT on goods purchased cannot be reclaimed. Charities can register for VAT depending on the nature of their supples.

Where a commercial operator operates the air ambulance on behalf of a charity, do they invoice their costs to the charity including VAT? Or is there an exemption certificate?

The above link covers only part of the minefield that is VAT and is not easy to summarise and it's already written in a faitly succinct form.

I could see this being very difficult to administer given the differing setups involved.

Cheers

Whirls

[aerobat77]

i cannot say anything about rotorheads, but in our company we regurarly do ambulance missions with aircraft , and when it comes to fuel it depends not if its ambulance or not, it depends if you are as the company entitled from the tax authority to take commercial fuel which is tax and VAT free. at least at our german operator.

you have to show to the pump attendant the such called "erlaubnisschein" or a allowance ticket and then he will bill it tax and vat free.

there is also antother vat : the general VAT when you fill the invoice tor the entire flight. here it depends- flights which start and end in the country of registration have to be billed with VAT, international flights are generally VAT free.

but things in UK or generally in helicopter operations may be different .

best regards

[Art of flight]

I think the difficulty in the UK is that the provision of air ambulances is the domain of profit making commercial contractors, and is not a joined up nationally controlled 'service', just that the funds for its existance are raised by charities, so is quite unlike the RNLI. Looking at the figures for VAT paid by the Yorkshire charity on aviation fuel last year, it would appear to be a tiny percentage of their operating costs compared to say vat on aircraft parts and servicing etc. Rather than an epetition for fuel vat why not have a good root and branch look at the whole air ambulance set up to save bigger money.?

[Helinut]

I am NOT an expert in VAT but I have been "doing it" for many years, and operating a small entity that is VAT registered.

If I provide consultancy services, I have to pay VAT on my outputs, so I add VAT at the going rate to my invoices. I charge on an agreed basis to the client. Very often the basis agreed is for a rate or possibly a fixed price, plus expenses. The expenses could be travel or accommodation or materials. Some of these inputs are standard rated, some zero, some special rate etc. However, I was picked up many years ago by HMRC that because my outputs were VAT rated at the standard rate, that ALL invoiced items needed to be charged at the standard VAT rate. My busness was the provision of consultancy services, NOT travel accommodation etc. So I charged std rate on expenses, no matter what. [It does not matter to my clients as they are also VAT registered, and claim back all their input VAT].

Transfer all that to an AA charity: for the majority in the UK I believe that most still have their helicopter operated by a commercial operator. That operator will be registered for VAT, and will charge VAT on all his outputs. My guess is that it depends what service the operator is registered as providing. If he provides commercial air transport, then he will have to charge standard VAT on all outputs. If he had his services to include the provision of aviation fuel, then maybe he could charge 5% VAT on the fuel.

We need an expert in VAT.......... However, we are only talking about 5% for fuel if that is separated out.

[homonculus]

I have spent years on this

The output is an ambulance which is exempt so the charity cannot reclaim it

The NHS spends billions on VAT and can't reclaim it

Ironically a few tax offices are allowing ambulances to be zero rated or at least they were several years ago so that two ambulances companies would tender for NHS work with a as then 15% difference but as far as I know all air operations are exempt

But once again the VAT on fuel is diddly. Compare it with a charity I know that has just paid for an X ray machine which will be operated by the NHS - the VAT burden to the charity was 20% of their money or one million pounds in one day. Surely far more deserving??

[206 jock]

But once again the VAT on fuel is diddly. Compare it with a charity I know that has just paid for an X ray machine which will be operated by the NHS - the VAT burden to the charity was 20% of their money or one million pounds in one day. Surely far more deserving??

Don't sign the petition then!

Jeesh:ugh:

[jabird]

The reason why the HMRC don't charge the airlines VAT on their fuel is quite straight forward. If the HMRC was to (unilaterally) charge VAT then the airlines just wouldn't bother to buy fuel from UK airports. They would just tank it in with them from elsewhere.

It's nothing to do with 'fairness', I'm afraid. I'm sure that the taxman would love to get his hands on that extra revenue.

Is there not also the small question of the Chicago Convention of 1944, which prevents levying of VAT on flights - or at least international ones? As a domestic leg could feed an international connection, my understanding is that domestic sectors remain exempt, although govt are looking at it. Considering the already high double dose of APD, this would face a challenge.

Now I presume the exemption applies equally to scheduled heli ops (eg Scilly Is), but I'm guessing an air ambulance client isn't technically a passenger as they haven't volunteered to pay a set far for a service rendered?

The salient point, is that medical supplies and services are VAT exempt and therefore, VAT on goods purchased cannot be reclaimed.

What about the copter itself? I have always understood that a new aircraft for commercial usage is not Vatable as it would be reclaimed. Even if tickets themselves aren't Vatable do they airlines still not have Vat numbers of other services which are chargeable? I believe a new craft delivered from, say, the US is also not subject to import duty as Boeing & co would scream blue murder.

I understand that private ga aircraft are both subject to VAT on purchase and on fuel.

There is obviously some middle ground with AA services due to the very unique nature of their passengers and the issues with charitable status or otherwise.

[helihub]

If this request for no VAT was to be put to the Government, they would likely want something back in return. And UK EMS really does not want to be indebted to the Government in any way shape or form.

[Whirlygig]

jabird ... big difference between commercial, international airline operators and suppliers of medical services. Homonculus, helinut and, I would like to think (ahem, modestly) myself, have got it right.

International air transport is zero -rated; medical services and supplies are exempt. These have two, distinct definitions in VAT law and regulations.

If a business makes any exempt supplies, it CANNOT reclaim VAT on any of it purchases or supplies.

If a business makes zero-rated supplies, then it CAN reclaim VAT on its purchases and supplies. It is making VATable supplies, it just so happens that the VAT rate is zero.

Zero-rated supplies, such as books, children's clothing, food etc have a VAT rate 0%. This means that it only takes a Chancellor's budget to amend the VAT rate levied.

An exempt supply (funeral expenses being another along with medical supplies) would require a whole Act of Parliament to change.

And that's before I delve into the realms of "Outside the scope of VAT" ..... :ok:

Cheers

Whirls

[DennisK]

Ahh Whirls ... some info if you can please. Just about to undertake a PPL(H) in Albacete. Is my service VAT rated, either UK or locally? Thanks Dennis K

[Whirlygig]

Geography ain't my strong point ... no idea where Albacete is ...

However, on the assumption that it's within the EC, then yes, your services as a flying instructor are VATable in the country in which the service take place.

BUT

If you are under that country's VAT threshold (for the UK it's £73,000 annual turnover but these thresholds vary wildly across the EC), you need not charge VAT.

Cheers

Whirls

[John R81]

Butif you carry out training in another country you are carrying out your business there. This is very likely to make you liable to business profit tax in that country unless there is a relevant Double Taxation Agreement and your activity falls within the exemptions from local taxation provided for in the DTA.

Isn't this so much more fun than flying? :ugh:

[jabird]

Geography ain't my strong point ... no idea where Albacete is ...

Well Geography is my strong point, and that one's as eeasy as ABC (its airport code ;). :D It is in Spain.

An exempt supply (funeral expenses being another along with medical supplies) would require a whole Act of Parliament to change.

That's interesting, never seen it explained that way.

International air transport is zero -rated; medical services and supplies are exempt

Hmm. Is there not a boundary definition about where the service is rendered? I've always understood that a domestic flight would be zero rated, and could be subject to VAT, but they use APD instead as a duty can't be reclaimed by business users. In effect, APD AND VAT would be double taxation, although that doesn't stop them using it for petrol.

And that's before I delve into the realms of "Outside the scope of VAT"

Well is that not where a long haul flight, or specifically one with a final destination outside the EU belongs? APD is effectively departure tax levied for the privilege of leaving blighty. A tax can't be applied on the value of the air ticket as only a very small proportion of that value is for a service rendered within the boundaries of the UK, or of the EU? For the same reason, a hotel stay in New York cannot be subject to VAT, even if booked via a UK travel agent.

Surely a similar rule applies for medevac?

[Whirlygig]

Is there not a boundary definition about where the service is rendered?Yes.

I've always understood that a domestic flight would be zero rated, and could be subject to VATIt is subject to VAT, it's just that the VAT rate happens to be zero.

In effect, APD AND VAT would be double taxationAirport Passenger Duty and VAT are totally separate taxes. Were VAT to be levied (depending on a Chancellor's whims), then there would be tax on tax - just like we have on petrol.

Well is that not where a long haul flight, or specifically one with a final destination outside the EU belongs?Nope - still zero-rated. "Outside the Scope" most commonly would be wages and salaries costs incurred by a business.

For the same reason, a hotel stay in New York cannot be subject to VATOf course it can't from a supply point of view although no doubt there will be a local GST applied.

Not prepared to enter into a pissing contest into who knows most about VAT.

Cheers

Whirls

[jabird]

Not prepared to enter into a pissing contest into who knows most about VAT.

You don't need to, as you'd easily win. I am just trying to get my head round the argument used elsewhere that us SLF are all "subsidised" because aviation is not taxed the same as, well - there's the problem, there isn't a same as to make a direct comparison with.

Air ambulances & passenger helis are somewhere in the middle ground between regular commercial aviation and general aviation, so the thread looked interesting. What about the helis themselves, are they zero rated then too? And not subject to import duty as presumably the purhase transaction takes place at the point of production?

I think it would take a sizeable campaign to force a change as HMRC don't like to lose a penny. I remember the one not too far back about taking the VAT off condoms, but that was backed by Superdrug. How could this campaign at least get a celebrity backer - there must already be some AA funders with deep pockets.

[FairWeatherFlyer]

Some recent related questions in Commons:

House of Commons Hansard Written Answers for 19 Mar 2012 (pt 0001) (http://www.publications.parliament.uk/pa/cm201212/cmhansrd/cm120319/text/120319w0001.htm#12031939000052)

House of Commons Hansard Written Answers for 15 Mar 2012 (pt 0001) (http://www.publications.parliament.uk/pa/cm201212/cmhansrd/cm120315/text/120315w0001.htm#12031549000049)

[FairWeatherFlyer]

Semi-related, on the income side for charities, the 2012 budget has sneaked in a cap on tax relief from personal income for donations:

introduce a limit on all uncapped income tax reliefs. For anyone seeking to claim more than £50,000 of relief, a cap will be set at 25 per cent of income. This will increase effective tax rates and help ensure that those with the highest incomes pay a fairer share

BBC News - Budget 2012: Charities could lose big donors (http://www.bbc.co.uk/news/business-17458362)

There's more joy tucked away in there, "something on zero rating relief on approved alterations to listed buildings":

Budget 2012: Charities could be hit by VAT change on listed buildings - Civil Society - Finance - News - providing news and in-depth coverage of charities, voluntary organisations and not-for-profits (http://www.civilsociety.co.uk/finance/news/content/11881/charities_could_be_hit_by_vat_change_on_listed_buildings)

For completeness, there is a positive change from last year's budget on inheritance tax which is designed to stimulate the legacy donations and comes into effect on 6-Apr-2012:

Directory of Social Change : Legal Eyes: Budget 2011 - Inheritance Tax changes and the impact for charities (http://www.dsc.org.uk/PolicyandResearch/news/legaleyesbudget2011-inheritancetaxchangesandtheimpactforcharities)

[FairWeatherFlyer]

Made the news,

BBC News - York man's petition to cut VAT on air ambulance fuel (http://www.bbc.co.uk/news/uk-england-york-north-yorkshire-17742449)

and in the context of the UK's Gift Aid scheme is getting a hard time from current government and the dopey general public who've just woken up to the allowances that have been in place for 12 years.

[FairWeatherFlyer]

The boy George kept the crowd pleasers rolling today:

BBC News - Tax changes to boost pensioners and savers in Budget (http://www.bbc.co.uk/news/uk-politics-26632862)


2.95
Grant for air ambulance and inland safety boat charities –
Following HM Treasury’s
review of the VAT air ambulance charities incur on fuel, the government will introduce a 5-year
grant of £65,000 per year for air ambulance charities across the UK. Following a consultation,
the government will also introduce a further 5-year grant of £1 million per year for inland safety
boat charities across the UK.


from https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/293759/37630_Budget_2014_Web_Accessible.pdf