The airline group told shareholders in the latest interim management report that HMRC is considering changing the VAT treatment of its Avios points scheme which gives members access to free flights and upgrades based on credits earned. In recent years the Avios scheme has been extended to a number of other benefits, giving access to cheaper car hire and shopping discounts.

This extension of the scheme triggered the HMRC review and it is now considering ‘whether to charge the tax on membership of the Avios programme’. The tax authority is in talks with British Airways to address the issue.

British Airways said that ‘at 30 June 2023, HMRC has issued protective notices of VAT assessments for the 19 months ended September 2019 to Avios Group (AGL) Limited, a controlled undertaking of the group trading as IAG Loyalty’. They also confirmed that none of the VAT notices were due for payment.

I