Remove VAT on Air Ambulance charity Fuel bills

[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" .....

Cheers

Whirls

[DennisK]

VAT

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?

[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 . 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 VAT

It is subject to VAT, it's just that the VAT rate happens to be zero.

In effect, APD AND VAT would be double taxation

Airport 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 VAT

Of 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)

House of Commons Hansard Written Answers for 15 Mar 2012 (pt 0001)

[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

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

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

[FairWeatherFlyer]

Made the news,

BBC News - York man's petition to cut VAT on air ambulance fuel

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

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/upload...Accessible.pdf