On Business, the British Airways loyalty scheme for small companies, was ‘restructured’ on May 27th.
The net result was to make the scheme more lucrative for purchasers of premium tickets and less lucrative for buyers of cheaper tickets, as well as making it harder for every member to earn enough points for premium class tickets. I wrote more about the changes here.
When you first logged in to the new On Business website, you would have been faced with a page which asked for your VAT number, if it was not already in your profile. You could skip past this if you didn’t have a VAT number to hand.
Over the last few days, the reason for this has become apparent.
British Airways is no longer awarding On Business points to entities which do not have a VAT number.
Flight bookings made before May 27th are still OK but new bookings will not receive any points.
It is important to note that this requirement does not appear anywhere in the On Business terms and conditions or on its website.
It was brought to my attention by a priest and HFP reader who runs a religious charity. His role involves extensive travel and the charity earns and redeems On Business points to keep down its flight costs.
Charities do not register for VAT unless they have retail operations, in which case the retail arm is ring-fenced and has a separate VAT registration. This charity is now de-facto barred from On Business.
Many small businesses may not have a VAT number if they do not have the circa £80,000 turnover required to make it a legal requirement. You might argue that, under the new On Business earning structure, such companies are wasting their time with the programme anyway as they will never earn enough for a reward – but that should be up to the company.
There is a published register of VAT numbers, so making one up in order to get On Business off your back is unfortunately not an option.
British Airways is, of course, entitled to set whatever rules it likes for On Business membership. Changing the rules in secret, however, is just stupid. At the very least, this change should have been prominently announced as part of the upgrade and non-VAT entities given a grace period in which to obtain registration or spend their points before their account was closed.
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About Head for Points
Unfortunately this smacks, yet again, of the clueless “corporate” in BA! My limited company has been a member of OnBusiness for over 10 years now. They brought out a similar, stupid, but not so difficult ruling, a few years ago. Their online system would not accept a “generic” email address for a business?! It had to be a “company” email address. It was easy to get around by setting one up.
This is entirely different. My company is not registered for VAT and does not require it.
All I can say, is that if BA close my account, based on a VAT number requirement, which is not in the T&C, nor on the website, and do not allow me to use my credited points (circa 15,000 currently) within a reasonable time, they will have a fight on their hands. 🙂
“before their account was closed”
Have accounts been closed for not adding a vat number?
I have tried to enter my valid vat number but it tells me that it is invalid.
I’ve not tried this with BA, but whenever I have to enter a VAT number I try all of the below, until it works (obviously replace with your actual VAT number):
123 4567 89 (note the spaces)
GB123 4567 89
GB123456789
Exactly the same issue here using our old VAT number (we recently deregistered).
On the upside have just spent my entire OB balance and the bookings went through without a hitch!
Thanks for the tip, I have managed to add my vat number by putting a space after GB.
GB 999999999
Ludicrous approach from BA – have you been able to speak to anyone directly to find out if this is an intentional change or just some rather uninformed folk who don’t understand the VAT Registration does not equal being a company?!
It is intentional based on the discussion the priest had.
OK, thanks – even worse that they’ve made such an unannounced change. As usual they’re dodging the issue on Twitter!
No way!! That’s outrageous. I have two businesses. One is VAT registered and one isn’t. I credited a couple of long haul CW flights to the non-registered one so I could take advantage of the new account bonus offer of triple points. Does this mean I’m going to lose them before I can spend them?!
No, you can spend your current points even with no VAT number in the account.
Indeed – contrary to what was being suggested by some on FT! Interestingly OB bookings look like they should earn TP/Avios according to MMB, but it is routinely wrong – any idea if they do earn?
They come out of a revenue bucket. ba.com may be set up to stop them posting (as it is with Gold Y redemptions in V) but AA, on the other hand ….
😛
This does not seem to have been well thought through. There seems no sensible reason to exclude companies/organisations which are not VAT registered – there are many reasons why businesses may not be required to register, such as charities and those which make VAT-exempt supplies. The criteria in the T&C of being a registered business with a valid business or company registration number is the most appropriate criteria to use.
If OB has members which are not geniune businesses BA has the means to remove them, but insisting on a VAT registration number will prevent many genuine business from using a scheme designed to promote BA to small to medium companies, which seems counter productive.
If companies without a VAT number cannot even spend earned points, as is being reported elsewhere, then this would seem to be very poor indeed. Any changes to the scheme should have be announced with full notice and should be in reflected in the T&C.
I hope this is just poor IT/change implementation and that BA reverse this change as soon as possible.
Any Medical type business is exempt from VAT. So well done BA for deselecting all those wealthy cosmetic surgeons, dentists and GPs who certainly do have the turn over to make the cut. (Proud of my pun!)
Surely the closure of accounts like this without prior warning is illegal?
They are NOT closing accounts. I was simply suggesting that if BA wanted to get rid of non VAT businesses they SHOULD have closed the accounts after a notice period. It would have been more straightforward than what they are doing.
Requiring VAT number in addition to Company Registration is a duplication. Looks like it’s done for the ease of IT people and automated checks.
Registering for VAT and submitting mandatory quarterly VAT Returns is a MAJOR administrative hassle and cost. You must keep VAT records for at least 6 years — all of them are subject to a spot check. On top, if a business charges VAT inappropriately they could be in a trouble.
I agree with those who pin the blame on this to a ‘corporate’ assumption/bias in Waterside.
I’d recommend a multi-signatory letter to the CEO’s office cc’ing Business Traveller magazine. It’ll soon get quietly dropped.
very good idea oyster! I’m certainly in the multi-signatory letter
Hear hear – I’m in too!
There is probably an element of VAT which BA are quite correclty trying to reclaim. If they have had a VAT inspection HMRC have probably made it clear to BA that they need to provide the customers VAT number. So this change has probably come from HMRC winning an argument with BA..
Charities and many Social Enteprises are not businesses and as a result mange to avoid contributing to various taxes such as business rates. Have a look down any high street in the UK and count the number of “charity” shops avoiding their taxes. So why should they benefit from these business to businees transactions with BA?
Businesses are NOT exempt from VAT as previous posters suggested but should be declaring their VAT inputs at 0%.
It is very easy to register for VAT as a sole proprietor and any savvy individual should be doing it regardless of their income to get 20% back on their purchases. Completing a VAT return is no more complicated than keeping an awardwallet account up to date.
“Businesses are NOT exempt from VAT as previous posters suggested but should be declaring their VAT inputs at 0%.”
I believe you’re wrong (in some cases). My business (as per 1st post above) is exempt, since all of the goods & services it sells are exempt. The business is therefore exempt and is unable to register for VAT. This also means that it can’t reclaim any VAT on business purchases or expenses.
I’m sorry but that’s not true on so many levels ! Small businesses can choose whether to register for VAT or not – if the do register they can claim back the VAT they pay but must add VAT to their final prices.
If they choose not to register they don’t have to add VAT to their final prices (and hence may be cheaper than larger companies they compete with) but are unable to reclaim VAT on the things they buy. It is there, perfectly legitimate, choice whether to register or not.
And as for your point about charities “avoiding” their taxes – they are not. It is true that the law says they don’t have to pay business rates but to categorising that as “avoiding taxes” is wrong – unless everyone who invests in an ISA or pays pension contributions gross is avoiding their taxes.
“Small businesses can choose whether to register for VAT or not – if the do register they can claim back the VAT they pay but must add VAT to their final prices.”
I suggest you read the official HMRC guidance on VAT exempt companies.
“Some goods and services are exempt from VAT. If all of the goods and services you sell are exempt, your business is exempt and you won’t be able to register for VAT. This means you can’t reclaim any VAT on your business purchases or expenses.”
https://www.gov.uk/vat-exemption-and-partial-exemption
There are some limited exceptions to this, such as for suppliers of finance or insurance services or of investment gold to customers in countries outside the EC, when you may register on a voluntary basis, in order to claim back any input tax you have paid in respect of those specified supplies. You are also able to recover input tax where your supply consists of insurance and financial services that are directly linked to the export of goods from within the EC to outside the EC.
My company is NOT permitted to register for VAT.
I’m all for complaining but let’s take it a bit further. Why should businesses without limited company status be excluded. I have more than enough turnover to require VAT registration but chose not to be a limited company but stay as self-employed trading as a name. But a few weeks after registering on On Business I was kicked out by their ‘audit’ team. Result? I take all my transatlantic flights with Virgin, who don’t have that requirement for their Flying Company corporate scheme. Just a more sensible minimum number of miles each year for the business.
Are BA trying to p*** off both leisure and corporate travellers at the moment?
Colin, I’m surprised you even managed to register!
Our business is run as a partnership (not an LLP) and we were not able to register as we do not have a company number, even though we do have a VAT number.
I know many solicitors who run their practices as partnerships, so it appears they would be excluded also. Same applies for many architects, dentists, etc,.
Utterly barmy.
Whilst I can see the annoyance in this, has anyone who legitimately has a non registered VAT company spoken directly to OB to see what they’ll do?
I have always found them to be very helpful in the past.
The priest who got in touch with me had done this. They were unwilling to help. If they won’t help a priest who runs a medical charity I don’t think you’ll be getting far.
“Businesses are NOT exempt from VAT as previous posters suggested but should be declaring their VAT inputs at 0%.”
Certainly wrong.
I own a financial services company and VAT is not a requirement.
For example , VAT is not chargeable on stock dealing commission .
Our business is not VAT registered. I’ve done a dummy (new) booking for return flights LHR to HKG departing later this year. The booking does say On Business points are available.
Doesn’t mean you will get them though!
I’ve pasted below my response to flyertalk thread on OB changes.
So I’ve received the following email a couple of weeks back:
“Thank you for enrolling onto the British Airways On Business loyalty programme.
To protect your On Business account British Airways regularly audit and check your details, and as part of this safety procedure we do ask that you provide us with the correct VAT number when you join our programme. (Please see the On Business Terms & Conditions.) However the VAT number you have provided is incorrect.
To begin your membership, can you please advise me of your correct VAT number. As your company address is in the UK you must have a UK VAT number to hold an On Business account.
If you do not send an email with your correct VAT number, British Airways reserve the right to close your account after 14 days.
If you require assistance, please contact the On Business Service Centre on 0344 493 0748.
If you would like to contact me again about this case please click on this link:
http://www.ba.com/your case”
I have politely responded saying that my company is not VAT registered. I’ve got the following back:
“Thank you for your reply regarding your On Business Account.
I am sorry but the On Business Programme requires a valid VAT number to be able to register for an account.
As you have not provided me with the requested information, I am very sorry to say that your company will not be able to hold an On Business Account and you account has been closed.
If you would like to contact me again about this case please click on this link:
http://www.ba.com/your case”
I’ve pointed out the T&C don’t mention VAT number requirement. To be fair to BA, they are free to pick and choose the companies they want to deal with under point 3.4 “Membership is offered at Our discretion and We may refuse Membership to any applicant.”. This however is a poor show (again). The final response was:
“Thank you for your reply about the On Business programme.
I am sorry you cannot register for an On Business account, as you do not have a VAT number.
The terms and conditions we have are global, but a VAT number is specified in the Enrolment form as a mandatory field.
If you wish to raise this as a complaint please use the customer relations webform found on ba.com
If you would like to contact me again about this case please click on this link:
http://www.ba.com/your case”