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UK Tour Industry Loses Legal Fight Against Green Tax

by Robert Lee, Tax-News.com, London

05 September 2007


A UK tour industry association has failed in its legal action over an increase in the Air Passenger Duty.

Rejecting the Federation of Tour Operator's request for a judicial review of the manner in which the APD increase was introduced, Judge Stanley Burnton, sitting in the High Court, said that the measure was "proportional" and the the FTO had "not established any of their grounds for challenging APD or its increase".

The FTO had sought a judicial review - which allows government decisions to be challenged through the courts - of the APD because, it argued, the government had failed to give the holiday industry sufficient notice of the tax rise. The unexpected increase cost tour operators some GBP50 million which, unlike airlines, they were unable to build into prices for those already booked to fly.

"(The government's) decision to ignore the industry's calls for this exemption effectively imposed a major and wholly unexpected financial penalty for the sector to absorb, one which disadvantages it against its many travel and airline industry competitors," the Federation said.

While Judge Burnton said that he had "some sympathy" with the industry's complaints and criticised the Treasury's decision-making process, he was insistent that there were no legal grounds to allow a judicial review.

Announced by then Chancellor of the Exchequer, Gordon Brown in the 2006 pre-budget report last December, the increase in APD was intended to be an environmental tax. As a result, economy and first class flights from the UK to Europe now face an APD charge of GBP10 and GBP20 respectively, while long haul economy passengers now pay a duty of GBP40, and business travellers GBP80.

The FTO however, argued that the retrospective imposition of the tax increase on bookings already made "shows that this element of the tax could in no way contribute to the Treasury's stated environmental aims".

The organisation said that it was "disappointed" with the High Court's decision, and is seeking advice on whether it has grounds for appeal.

Although the FTO was refused permission to appeal by the High Court, it can still ask the Court of Appeal directly to consider its case.


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