Air Departure Tax Administration Regulations: business and regulatory impact assessment

Section 3: Assessment of Impact on Business, Investment and the Economy

3.1 Costs to Businesses and other potential impacts

There are currently approximately 50-70 commercial APD taxpayers in Scotland. Revenue Scotland does not yet have an accurate figure of occasional returners (such as private and business jet operators), but this is expected to be less than a third of the total number of commercial operators. As such, a relatively small number of airlines and other aircraft operators will be liable to register and pay ADT.

The Scottish Government would expect the administration costs involved in ADT to be broadly similar to those for APD. Any costs are anticipated to be minimised by the similarities of the two tax regimes. Although the exact format of the ADT tax returns will be set out by Revenue Scotland in due course and may differ from that of APD, the Scottish Government expects that any tax return would draw on data that taxpayers have readily available and is already required to make APD tax returns.

This analysis of costs to business builds on the BRIA that the Scottish Government published in 2017 which assessed possible impacts as a result of the ADT (Scotland) Act 2017 and devolution of powers to introduce a tax on the carriage of passengers by air from airports in Scotland.

3.2 Benefits to Businesses

Revenue Scotland has proactively engaged stakeholders on the ADT registration process and tax returns. Feedback has been constructive and has resulted in the development of products that will provide Revenue Scotland with information that will allow it to carry out necessary administration and undertake tax risk analysis, whilst also ensuring the administration burden on ADT taxpayers is minimised.

The collection and management of ADT will be designed to operate digitally by default, in order to maximise convenience for the taxpayer and efficiency for Revenue Scotland. The tax administration systems will be designed to take place online in accordance with the Scottish Government's Digital Nation Principles.

Customer experience is expected to stay broadly the same, as this measure does not change how individuals interact with Revenue Scotland.

3.3 Specific Small Business Impact

The ADT Administration Regulations are not expected to impact small business as the tax will be paid by airlines and other aircraft operators.

3.4 Impact on Scottish Firms’ Competitiveness

We have applied the Competition and Markets Authority Competition Filter questions and concluded that the proposals will neither directly nor indirectly limit the number or range of suppliers, limit the ability of suppliers to compete or reduce suppliers' incentives to compete vigorously.

3.5 Impact on Scottish Firms' ability to Trade Internationally

The Regulations are unlikely to be any direct impacts to alter Scotland’s appeal as a place for global investment and trade.

3.6 Impact on Investment Opportunities for Scotland and Scottish Firms

The Regulations are unlikely to lead to any direct impacts to alter Scotland’s appeal as a place for global investment and trade.

3.7 Impact on Employees

The Regulations are unlikely to be any direct impacts affecting employees.

3.8 Impact on Consumers – The Consumer Duty

The Regulations are not expected to have any impact on consumers. Future consumer costs will be dependent on the tax rates and exemptions set for ADT and impacts will be considered at the appropriate time.

3.9 Impact on Regulators

The Civil Aviation Authority (CAA) is responsible for the regulation of aviation safety in the UK, determining policy for the use of airspace, the economic regulation of Heathrow, Gatwick and Stansted airports, the licensing and financial fitness of airlines and the management of the ATOL financial protection scheme for holidaymakers. The CAA is a public corporation of the Department for Transport.

The ADT Administration Regulations are not expected to impact on the work of the CAA or any other UK regulators.