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...

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.

We know everyone is suffering under the Tories - but the Canary is a vital weapon in our fight back, and we need your support

The Canary Workers’ Co-op knows life is hard. The Tories are waging a class war against us we’re all having to fight. But like trade unions and community organising, truly independent working-class media is a vital weapon in our armoury.

The Canary doesn’t have the budget of the corporate media. In fact, our income is over 1,000 times less than the Guardian’s. What we do have is a radical agenda that disrupts power and amplifies marginalised communities. But we can only do this with our readers’ support.

So please, help us continue to spread messages of resistance and hope. Even the smallest donation would mean the world to us.

Support us