Scottish Air Departure Tax
Scottish Air Departure Tax (ADT) will soon replace UK Air Passenger Duty (APD) in Scotland and limit the latter's geographical scope to England, Wales and Northern Ireland. The legal foundation was formed on 20 June 2017 when the Scottish Parliament passed the Bill for the Air Departure Tax (Scotland) Act 2017. It received Royal Assent shortly afterwards on 25 July 2017.
The new replacement tax has initially been planned to take effect in April 2018. But the UK and the Scottish Government decided to delay its introduction because discussions about a possible tax exemption for flights from the Highlands and Island airports had not been concluded on time.
What is Scottish Air Departure Tax?
It doesn't come as a surprise that ADT looks very familiar. Most of its design elements are very similar to what we know from UK APD, if not identical. ADT is levied on the carriage, from a Scottish airport, of passengers on board aircraft with a MTOW of more than 5.7 metric tons (12,500 lbs).
As with UK APD, the amount of tax due depends on the passenger's final destination and aircraft characteristics (MTOW, seat pitch and seating capacity). The tax bands and tax rates are still unknown as they have yet to be defined through secondary legislation.
What is known, however, is the tax rate structure. Depending on your aircraft, you will either pay the standard rate, premium rate or special rate. The special rate is due for business jets with a MTOW of more than 20 t and a maximum seating capacity of less than 19 passengers. The Scottish standard rate applies where the conditions for the special rate are not met and where the seat pitch is no greater than 1.016 metres. Otherwise, passengers are charged the premium rate.
Did you know?
Revenue Scotland is responsible for collecting and managing ADT. The reporting of tax will be done through the Scottish Electronic Tax System (SETS) platform.
Who is liable for ADT?
Aircraft operators are liable to ADT on the carriage of chargeable passengers on a chargeable aircraft for flights that begin in Scotland. Chargeable aircraft are fixed-wing aircraft with a MTOW of more than 5.7 metric tons (12,500 lbs).
Certain flights and passengers may, however, be exempt from ADT. Exempt are flights operated under a public service obligation, emergency medical service flights, military, training or research flights. Passenger exemptions apply to persons that are working during the flight, such as flight crew, cabin attendants, persons undertaking repair, maintenance, safety or security work, persons not carried for reward, such as Civil Aviation Authority flight operations inspectors, or children under the age of 16.
Obligations under the ADT
You must make occasional returns and submit payment of tax within 30 days of the qualifying flight taking place if you don't declare and pay ADT on a quarterly basis. The participation in quarterly accounting is mandatory if you intend to carry out qualifying flights on more than 12 days in a given 12-month period or if you expect your total ADT liability for that 12-month period to exceed £20,000. But even if you are below this threshold, you can still opt in voluntarily.
If you are required or choose to participate in quarterly accounting, you must:
- apply to register no later than 30 days after becoming liable to make quarterly returns
- appoint a fiscal or administrative representative if the operator has no business or other fixed establishment in the European Economic Area (EEA) no later than 7 days after becoming liable to make quarterly returns
- notify Revenue Scotland of the details of the appointment no later than 7 days after the appointment is made
- provide security for administrative representative (if any)
- if you no longer plan to make flights from Scottish airports, advise Revenue Scotland within 30 days of the decision to no longer operate
- keep records and accounts for five years