UK APD & Upcoming 2015 Changes: Part 2 – Payment & Compliance Issues
This article continues from our article last week, entitled "UK APD & Upcoming 2015 Changes: Part 1 – APD Basics"
Although reporting and paying UK Air Passenger Duty (APD) have been legal obligations since April 2013, many General Aviation (GA) operators still do not do so. For this reason, Her Majesty’s Revenue and Customs (HMRC) has stepped up its policing of non-payers, and penalties are being enforced for non-compliance. APD is a self-declared duty, but HMRC can track flights and contact operators or the Fixed-Base Operators (FBOs) that they use if HMRC thinks duty hasn’t been paid.
The following is an overview of what you need to know:
1. Paying UK APD as an occasional operator
To qualify as an occasional user, 1) you will operate no more than 12 flights from the UK in one year, and 2) your annual liability for UK APD should be less than £5,000. Payment should be made to HMRC within seven days of departing a UK airport. Payment can be 1) made via form APD6, which can be downloaded from the HMRC website, 2) made through your ground handler (in limited circumstances), or 3) managed through your appointed APD administrator. It should be noted that with higher prices it will become more difficult to qualify as an occasional operator. Beginning April 2015, one single GA flight departing the UK, classified in the higher APD rate on Band B, with 12 passengers on board, will hit the £5,000 occasional operator annual tax liability threshold.
2. Paying UK APD as a registered user
If you operate more than 12 qualifying flights from the UK annually and/or have UK APD liability of £5,000 or more each year, you’ll need to register with HMRC. Registration is done via form APD 1, which can be downloaded from the HMRC website. APD for registered operators should be paid on a monthly basis or in some cases annually. This step can be done directly to HMRC or, if you have one, through your appointed APD administrator. To qualify for the annual scheme, operators should have APD liability of no more than £500,000 per annum. It is a legal requirement, when you register on the HMRC site, to appoint a UK-based administrative or fiscal representative.
3. Administrative and fiscal representatives
Notice 550 on the HMRC site contains the full and detailed definitions for both administrative and fiscal representatives. Admin or fiscal representative are fundamentally the same, with the main difference being, if you appoint an admin rep, you will be required to lodge a security deposit with HMRC, whereas with a fiscal rep there is no requirement for this. An admin or fiscal representative will be jointly liable for any APD charges you accrue.
4. Additional methods of payment
As UK APD is a government fee and not an airport fee, payment needs to be made directly to HMRC, if you do not use an appointed APD administrator. This fee will rarely be included by an FBO in handling charges for an occasional user and never for a registered user. HMRC has approved a few UK-based companies to act as APD administrators for operators and pay these fees on their behalf. It doesn’t, however, remove any liability for the aircraft operator. Be aware that many ground handlers in the UK do not want to get involved as collection of APD charges could create down-line tax liability issues for them.
5. Penalties for non-compliance
A growing number of operators who have not been paying applicable UK APD charges have been contacted by HMRC and are receiving penalties. There are also ramifications for ground handlers to consider. If HMRC determines that an operator has not paid its applicable APD charges, the ground handler may be contacted and informed that he or she (the handler) may be held liable for future APD charges owed if he or she handles the operator’s aircraft again. It’s unknown at this time if penalties will increase, or if there will be other ramifications for non-compliance.
6. Additional information
For additional information on UK APD, please see the resources below:
- HMRC budget overview (see section 5.8)
- Air passenger duty: recent debates & reform (UK Parliament)
- Notice HMRC 550
It’s important to become familiar with UK APD rules, obligations, and payment procedures. Qualified 3rd-party providers have the ability to act as either your administrative or fiscal representative. They’ll help with the paperwork and filing obligations involved with this escalating UK excise duty and its collection.
If you have any questions about this article or would like assistance with the UK APD, please contact me at firstname.lastname@example.org.