UK FTO confident it can force withdrawal of govt's Air Passenger Duty tax

UK FTO confident it can force withdrawal of govt's Air Passenger Duty tax

	Published : Mon, 26 Feb 2007 18:09 By : Agencies Print this Story

(Adds potential repayment detail in par four)

LONDON (AFX) - The UK's Federation of Tour Operators (FTO), which has launched a legal challenge to the government's Air Passenger Duty (APD) tax, is confident it can force the complete withdrawal of APD, which chancellor Gordon Brown doubled earlier this month.

'The FTO is represented by Herbert Smith and they have issued paperwork to the government for judicial review and these have already gone to the treasury,' an FTO spokesman told AFX News this afternoon. 'We know this will take months rather than weeks but we believe we have a serious challenge and think we can be successful.'

The decision to double APD from Feb 1 means passengers now have to pay 10 stg for economy class fights to Europe, 20 stg for business and first class flights to Europe and 40 stg for economy and 80 stg for business and first class long-haul flights.

If the FTO is successful in its legal action it could leave the government open to claims by airlines and their customers for the repayment of around 2 bln stg that has been collected since 2004.

The FTO has claimed that as a signatory to the 1944 Chicago Convention on International Civil Aviation, incorporated into EU law in 2004, the UK government is not entitled to impose charges on aircraft solely for the right of transit from or into the UK from a fellow state. The FTO said charges were only permitted if they were cost-based in relation to the provision of a service, adding that APD was not levied for any such service and was simply a tax which raised revenue for general government spending.

The FTO has also argued that there has been a breach of Article 1 of the first protocol of the European Convention on Human Rights. It said that the unsatisfactory manner in which APD has been introduced interfered with the legitimate property rights of tour operators, depriving them of income to which they were entitled.

The FTO was also unhappy that the APD increase applied to people who had already booked holidays before Feb 1 but were liable for the rise if they travelled on or after that date.

'Under law our members are unable to pass these increases on to customers and it has cost our members around 50 mln stg in this instance,' the FTO spokesman said. 'APD, which has already raised over 12 bln stg for the government, is not a tax which is used to support transport or environmental initiatives.'

Another FTO gripe is that the government did not given Britain's tour operators enough time to prepare for the change in tax.

'Our members have simply not been given enough notice to implement this properly,' the FTO spokesman said. 'With such increases in the past our members have been given 11 or 12 months to prepare for increases but this time they were just given 7 weeks, which is just not enough time. The time-frame was unexpected but airlines can live with it because they can pass costs on but tour operators cannot.'

A Treasury spokesman said: 'The government is confident that APD is entirely legal and will robustly defend any challenge in the courts.'

r.jones@thomson.com

rj/slm

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