Government threatened with legal action after giving Flybe a £10m ‘tax holiday’

Support us and go ad-free

Flybe confirmed it has agreed a financial arrangement with HM Revenue and Customs to defer tax payments of “less than £10 million”.

The government intervention on Tuesday has reportedly saved Flybe from collapse. This deal gives the airline a few more months to pay outstanding taxes.

HMRC and the government said all tax arrangements are “confidential” but deferred tax arrangements were common. Flybe added:

This is a standard Time to Pay arrangement with HMRC that any business in financial difficulties may use.

Lack of transparency

As a result of the decision, rival airlines have complained and are also demanding a tax holiday.

British Airways owner International Airlines Group (IAG) has written to the European Commission, claiming the arrangements breach state aid rules. IAG bosses have also written to the government demanding answers over the exact nature of the deal struck with Flybe. They have accused ministers of a “lack of transparency”.

Read on...

Support us and go ad-free
Willie Walsh
IAG boss Willie Walsh has been critical of the move (Nick Morrish/British Airways/PA)

Meanwhile, Ryanair chief executive Michael O’Leary said he’d take the government to court if other airlines weren’t also given a tax holiday. He also called for answers over the nature of the Flybe deal.

In a letter to chancellor Sajid Javid, O’Leary said:

Should you fail to confirm these facts within the next seven-day period, please be advised that Ryanair intends to launch proceedings against your Government for breach of UK and EU competition law, and breach of state aid rules.

More time to pay

The government said it stepped in to save the airline due to its network of domestic flight routes, with many not operated by rival airlines.

The airline’s chief executive Mark Anderson told PA on Thursday that he was in talks with the government about a loan which would give them more time to pay the tax owed.

However, despite the climate crisis, the government has also reportedly been considering a cut to Air Passenger Duty (APD) tax. Airlines continue to be among the biggest producers of carbon emissions. Being lenient towards them on tax raises questions about this government’s commitment to tackling climate change.

Support us and go ad-free

Do your bit for independent journalism

Did you know that less than 1.5% of our readers contribute financially to The Canary? Imagine what we could do if just a few more people joined our movement to achieve a shared vision of a free and fair society where we nurture people and planet.

We need you to help out, if you can.

When you give a monthly amount to fund our work, you are supporting truly independent journalism. We hold power to account and have weathered many attempts to shut us down and silence the counterpoint to the mainstream.

You can count on us for rigorous journalism and fearless opposition to an increasingly fascist government and right wing mainstream media.

In return you get:

  • Advert free reading experience
  • Behind the scenes monthly e-newsletter
  • 20% discount from our shop

 

The Canary Fund us