The U.K. government is demandng £5.8 million (US$7.8 million) in taxes that it says the British government owes on flight attendant hotel stays near London Heathrow airport.
The case, HMRC v British Airways PLC, Upper Tribunal Tax and Chancery Chamber, UT-2025-000052, argues that BA provided hotel rooms to cabin crew near London Heathrow airport when doing short overnights as part of longer trips, but these are London stays for flight attendants based in London. They could have just gone home. So the expense isn’t deductible.
Sofitel London Heathrow
Sofitel London Heathrow
His Majesty’s Revenue and Customs department treated the hotel stays as taxable. British Airways disputed that treatment and won in the First-tier Tribunal, and the government appealed.
Tax treatment of British Airways layover hotels in London have been an issue for some time. There was a FOIA request in 2013 about how these rooms were being taxed and the government refused disclosure on taxpayer confidentiality grounds.
When British Airways scheduled back-to-back trips where they spent the night in London, BA paid for a layover hotel rather than treating the crew as simply off duty at home. This is important because flight attendants need minimum rest between flights, which amounts to time ‘behind the door’ and commutes eat into this.
The government says that the rooms were a taxable employment benefit, rather than a necessary business expense.
- BA provided something of value by reason of employment.
- The travel subsistence exemption is only allowable if the employee could deduct the same cost if they were the ones paying.
- London Heathrow is their permanent workplace or base. Accommodation at or near a permanent workplace is not deductible business travel. Ordinary commuting and private living costs aren’t deductible.
Put another way, the business trip ends when the flight attendant returns to Heathrow. Their next flight out of Heathrow is a new trip. Expenses incurred in London for London-based crew are a taxable employee benefit, not a deductible business expense.
The British Airways position, though, is that the hotel stay occurred in the middle of a trip not as an employee benefit prior to work. The accommodations were needed to meet BA’s operational needs. Since flight attendants need to meet minimum rest to work, this was part of a single trip rather than a hotel room provided between trips. The case comes down to,
- Was Heathrow/London the crew member’s permanent base?
- Was the hotel stay part of one continuous trip, or accommodation before the next trip?
- Did the crew have a real practical ability to go home?
- Was BA providing accommodation for its own operational requirements, or was it paying for private lodging near the employee’s normal base?
I think the simple way to resolve this is that everyone knows British Airways would never spend a dime on employees that it did not have to. The only reason they would do this is for their own operational needs. That British Airways has largely become a low cost carrier largely means they also owe less tax
BA no longer operates back to back shifts for crew.
Huh, didn’t know the UK also had its own ‘FOIA.’ Gary teachin’ us stuff every day on here…
@Polly – this is a long-running tax dispute as I note, going back over a decade
The government’s position seems indefensible. They are working on that stay and if they live nearby is irrelevant.
Maybe according the letter of the law, but it’s just stupid.
Government overreach to keep feeding the insatiable’ tax sucking beast. So long as the room tax, city tax, use tax, air tax, life tax, wear and tear tax, tourist tax, amenity fees, and 900 other add on taxes were paid, the government can kick rocks in my opinion.
We are being taxed into the poor house… Seems to be the same across the pond.
@D Fray — Who’s “we”? Because, in the US, the super-wealthy and corporations are paying a lot less taxes these days… (unless you’re one of those ‘sovereign citizen’ types who think they don’t think you don’t need to pay any taxes at all…)
Greedy government.
This is why I come here. Tax disputes.
@Mantis — Welcome back, Dr. Toboggan… good morning, sir. Happy Friday…
In other news ba raises surcharges to 2000 dollars one way on award tickets to pay off tax liabilities
Since the subject of US tax has come up: We are constantly told (constantly!) that the rich don’t pay their “fair share.” Here’s the thing: according to the Congressional Budget Office’s own data for 2022, the bottom 60% of American households paid just 12.8 percent of all federal taxes. That means means the top two quintiles, the top 40 percent of earners, shouldered roughly 87% of the entire federal tax burden. Eighty-seven percent. And it gets better: the top 1% alone paid 27.3% of all federal taxes while earning 17.8% of the income, and the effective federal tax rate climbs from 1.4% for the bottom quintile to 23.2% for the top quintile and 31.5% for the top 1%. On income taxes specifically, the IRS data is even more lopsided: the bottom half of earners paid just 3.3% of all federal income taxes in 2023, while the top half paid 96.7%. So when someone tells you the American tax code is rigged for the wealthy, ask them one simple question: rigged compared to what? The data say the U.S. federal tax system is steeply progressive, full stop.
IRC Section 162 refers to the federal tax law that allows businesses to deduct all “ordinary and necessary” expenses paid or incurred during the taxable year to carry on a trade or business.
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This expense in the USA falls under the above. BA did NOT permit the Emplyees to go home but required them to stay at the hotels so they would not time out.
For clarification, the virgin dirty tricks campaign by BA I’m not a fan and don’t trust them, that being said, cabin crew are primarily safety crew, therefore getting the correct amount of rest, it really shows that HMRC do not understand safety in the air, in this instance I support BA they get an A+ HMRC earn themselves a big fat F
@Mike Hunt — I’m in-favor of a simplified tax structure to eliminate all the loopholes that enable the wealthy and corporations to avoid their obligations, and would actually encourage all people and businesses to engage in healthy, efficient innovation (buzz buzz… all the buzzwords!)
First, at least for federal income tax, let’s pre-populate tax forms for the majority of wage-earners who do not have much else than their W-2s and a few 1099s (unless you’re already bought by the TurboTax lobby….)
Second, let’s also consolidate retirement accounts, eliminate nearly all itemized deductions, and raise the standard deduction (again, unless you’re bought by industry-specific lobbyists who forced those loopholes in the first place… oh, they’ll put up a huge stink!)
And, probably most importantly, capital gains… ‘buy, borrow, die’ must end, if we ever want to return to any system of fairness in the country. Until then, we really do have an untouchable capital class that does no real work, yet controls everything and gets all the benefits, while others basically just slowly radicalize until… one of the Mario Bros goes to a Hilton (no bueno.)
Of course, let’s massively beef-up enforcement to go after those who offshore, who create fake tax shelters in fake businesses… oh, wait, I guess all of this is ‘communism, socialism, Maosim, Stalinism, right? (No, it is not ending private property or ‘seizing the means of production,’ but, Mike wants to protect those industries who lobbied to hard in the past, so boogeyman it is.)
Got any better ideas?
The fact that these bloodsuckers of the upper echelon are paying most or all of the tax is just more evidence showing the ridiculous state of income-distribution, such that the huge majority is so poor they’re not earning enough to pay any significant tax.
Okay, so here’s the funny thing, and I mean genuinely funny: about half of what you just said is stuff conservatives have been proposing for decades, and the other half is where you smuggle in the bad economics under cover of the good stuff.
Pre-populated tax returns? Fine. Great. I’m fully on board. The IRS already has your W-2, and the only reason you’re re-typing it into TurboTax is rent-seeking by tax-prep companies. Congratulations, you’ve discovered that lobbying distorts markets. Welcome to the case for smaller government; we have jackets.
Killing itemized deductions and raising the standard deduction? Buddy, that’s literally what the 2017 tax reform did. Nearly 90% of filers now just take the standard deduction, so you’re praising the framework while booing the people who built it, which is a neat trick.
But then the mask slips: “buy, borrow, die.” What you’re actually proposing is taxing unrealized gains, meaning taxing money that does not exist yet, on paper valuations that go up and down. That means taxing people on wealth they may never receive, forcing asset fire-sales, and crushing liquidity. And trust me, the exemption threshold starts at billionaires and ends at your 401(k), because that is how every tax in American history has worked.
The income tax itself started at 7% on the ultra-rich, and hello, look around. As for the “capital class does no real work” line: allocating capital is the work. It’s the difference between your retirement account growing and your retirement account being a mattress.
But here’s the part I won’t laugh off. You just winked at the assassination of a healthcare executive, a father of two gunned down on a sidewalk, as the understandable endpoint of tax frustration. No. Absolutely not. The moment your economic argument requires a body on a New York sidewalk as a rhetorical exclamation point, you’ve left policy and entered the justification of political murder, and I don’t debate that. I condemn it, full stop.
So yes, I’ve got a better idea: simplify the code, flatten the rates, broaden the base, tax gains when they’re actually realized, and leave the romanticizing of vigilante violence out of fiscal policy entirely.
London has its own Mamdani.
The U.K. government is demandng £5.8 million (US$7.8 million) in taxes that it says the British government owes on flight attendant hotel stays near London Heathrow airport.
Aren’t U.K. government and British government the same thing?
@Mike Hunt — We may disagree on ideology and rhetoric, but we actually do share common ground on much of tax reform (pre-populated returns, eliminating special-interest loopholes, and raising the standard deduction). As far as our differences of opinion, with buy-borrow-die, if a billionaire (or centi-millionaire) can use an asset as collateral for a massive bank loan to fund their lifestyle without paying income tax, that asset is functioning as liquid wealth and should be taxed accordingly. The issue isn’t that capital allocation has no value; it’s that the tax code privileges passive investment over actual W-2 labor by taxing it at a much lower rate. On 2017 reforms, raising the standard deduction was a temporary benefit for regular workers used to mask permanent, structural tax cuts for corporations and the ultra-wealthy. Finally, unlike the crazies (who are outliers), I do not condone such violence. I still think compromise and realistic reforms are possible and the better way.
@Coffee Please — No one is perfect, but Sadiq Khan and Zohran Mamdani are both doing well for their respective cities. I’m not a Londoner, but I can attest that most of NYC quite is pleased with Mayor Mamdani so far. I’d vote for him again.
@Mike Hunt your comments betray your indoctrination. When you become outraged at the death of a *single* healthcare executive whose conscious decisions caused the needless death and suffering of hundreds of thousands of people whose claims were denied, just so he and other stakeholders could make even more money, it points out your hypocrisy. While neither is moral, imposing death and suffering on hundreds of thousands of patients and their families with the stroke of a pen for profit is much more reprehensible than the act of killing the individual responsible for doing so.
While I do not support his methods, Luigi Mangione’s actions objectively saved human lives and reduced suffering by reducing the number of subsequent healthcare insurance claims that were rejected both by UnitedHealthcare and other healthcare insurers, out of fear for the possible consequences of continuing to do so.
For-profit healthcare is completely unconscionable, and the US is the ONLY western, industrialized nation that does not have a system of universal health care. That the US population has been so completely brainwashed into thinking that this is even remotely acceptable further demonstrates the hazards of your corporate-controlled media.
From the ProPublica investigation, we know that the 25 richest Americans paid a tax rate of just 3.4%, based on the leaked IRS data(2014-2018), and that 23 of the largest and most profitable corporations paid ZERO corporate income taxes from 2018 to 2022, while shifting nearly a TRILLION dollars in assets to overseas tax havens in 2022 alone.
Mike, it would seem that you are sadly a product of Horace Mann’s “Prussian Model”-inspired American educational system, whose role is to produce compliant and obedient workers and soldiers to serve their corporate and political/ecomomic elite masters; rather than independent thinkers capable of critical thought and analysis. If that were not the case, you would likely realize your ruling elites have sold you a bill of goods so successfully, that not only have you been completely hoodwinked, but you are even defending your own exploitation. From an outsider’s perspective, it would be humorous, if the consequences for the average American were not so dire.
The government’s arguement is rather weird. My work sometimes demands that we work late (sometimes till midnight) and be back at the office by 7am the following morning. This is impossible to achieve if we were to go home so the company pays for us to lodge in a hotel near the office. I guess the BA situation is similar.
Woah, @Peter! Bravo!
HMRC bloody mindedness again. Trying to tax employees on legitimate expenses (and in this case obligatory expenses) is part of a long running unfair attack on workers. They never give up and when they finally lose they promise to change legislation to get their way*.
* Artic Systems
‘The UK government is demanding £5.8 million (US$7.8 million) in taxes that it says the British government owes on flight attendant hotel stays near…’
I think you mean that British Airways owes the money.