British Airways Plc v The Commissioners for HMRC

Facts

British Airways PLC, the appellant, operated back-to-back (B2B) rotations for its worldwide fleet cabin crew: two transatlantic trips from Heathrow linked by a rest period at Heathrow in hotel accommodation, in addition to hotel accommodation in the United States. HMRC had always accepted that the US accommodation was not assessable to income tax or NICs. Heathrow accommodation had been reported as a benefit in kind from 2009/10, because crew then had a choice whether to use it. From February 2016, following the EASA flight time limitation regulations, the appellant treated the Heathrow accommodation (provided at a Premier Inn near Terminal 5) as mandatory for crew and no longer a benefit. On 21 February 2022 HMRC issued a decision under section 8(1)(c) of the Social Security Contributions (Transfer of Functions, etc.) Act 1999 that Class 1A NICs of £555,916.92 were due for the period 6 April 2018 to 5 April 2019, on the basis that the accommodation cost was earnings by way of benefit in kind. By contractual settlement, the decision covered a sample period, but the parties agreed that income tax and NICs of £5,784,167 were at stake across 6 April 2016 to 5 April 2020. The appellant appealed to the First-tier Tribunal (Tax Chamber), which heard the appeal over three days in February 2025.