Flybe rescue plan must be clarified

The legality of the government’s decision to allow failing airline FlyBe to defer a £106m tax bill has been questioned by a tax think tank. The deal is understood to involve the short-term deferral of an outstanding air passenger duty (APD) tax bill of £106m a possible loan and a promise to review APD levels before the March budget.

In a letter to HMRC TaxWatch director George Turner questioned the lawfulness of the decision. He said: ‘As with any executive decision the Commissioners are obliged to exercise their powers fairly and apply the rules in a consistent manner. Failure to abide by these well-established principles could render any decision unlawful. Air passenger duty is a tax paid by the passenger but it seems that rather than pass the money on to HMRC Flybe has spent it instead. It is extremely difficult to understand how such...