Ryanair Ltd v HM Revenue and Customs

Whether successive flights qualify as connected flights for air passenger duty depends on the conditions prescribed by the relevant delegated legislation. The statutory scheme does not confine those conditions to matters other than ticketing, nor does it make ticketing requirements merely evidential. Where the order makes conjunction tickets a condition of connected-flight treatment, that condition forms part of the exemption. The court may apply the “always speaking” principle to technological change, but later changes cannot justify deleting workable words that had an operative meaning when enacted. Surplusage is not lightly assumed and words may be disregarded only where giving them effect would fatally undermine the legislation’s evident purpose.

Ryanair appealed to the Court of Appeal against the Upper Tribunal (Tax and Chancery Chamber), which had dismissed its appeal under section 16 of the Finance Act 1994 and its related judicial-review claim. The judicial-review decision was not appealed.

The dispute concerned air passenger duty claimed to have been overpaid between 16 September 2007 and 31 March 2011. Ryanair argued that the ticketing provisions in the Air Passenger Duty (Connected Flights) Order 1994 were evidential aids, rather than substantive conditions for the connected-flights exemption. It also argued that the primary legislation confined ticketing requirements to section 31(3)(a), and that paper-based conjunction-ticket provisions should be disregarded in the modern electronic booking context.

The central issue was whether the temporal rules and ticketing requirements in the Order had both to be satisfied.

1. The appeal was dismissed. The Upper Tribunal was right to hold that Ryanair could not claim the connected-flights exemption on the agreed facts.
2. Section 28 of the Finance Act 1994 imposes air passenger duty on each flight beginning at a United Kingdom airport, subject to the connected-flight provisions. Sections 30(6)–(8) leave the definition of a connected flight to the order made under section 30(8). That statutory language does not restrict the subject matter of the order or exclude ticketing conditions.
3. Section 31(3)(b) operates with sections 30(6)–(8) and does not create an exclusive division under which section 31(3)(a) contains all substantive ticketing requirements. The relevant Order therefore supplies the conditions by which successive flights are treated as connected.
4. Paragraphs 2 and 3 of the Air Passenger Duty (Connected Flights) Order 1994 make the Schedule part of the provisions determining connected flights. Although Notes (5) and (6) are inelegantly placed as notes of interpretation, their wording imposes substantive conditions. Notes (5)(a) and (5)(b) are expressed as equal alternatives, and conjunction-ticket requirements cannot be treated as merely evidential.
5. The “always speaking” approach may accommodate modern electronic booking systems where the statutory language permits it. It does not justify deleting Notes (5)(b) and (6). When enacted, those provisions were workable, and subsequent technological developments cannot determine their original construction. The exceptional power to disregard surplusage applies only where giving words their natural or possible meaning would fatally undermine the evident legislative purpose.
6. Any vires challenge to the connected-flight provisions failed for the same reasons. The appeal was dismissed.

• Court of Appeal (Civil Division): Appeal dismissed on 4 April 2014.
• Upper Tribunal (Tax & Chancery Chamber): The tribunal held that Ryanair was not entitled to the connected-flights exemption and dismissed the judicial-review claim. The appeal against the judicial-review decision was not pursued.