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No BA On Business points if you don’t have a VAT number – the change they never told you about

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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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Comments (32)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • oyster says:

    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.

  • Andi says:

    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.

    • Nick says:

      “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.

    • Rob says:

      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.

      • Nick says:

        “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.

  • Colin JE says:

    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?

    • Camille says:

      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.

  • ts77 says:

    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.

    • Rob says:

      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.

  • Swissy says:

    “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 .

  • Jo says:

    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.

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