Virgin Air Miles - useless?

SW17

Derek_Mott wrote: »

On top of all this one must question the whole system of air miles. Presumably once the miles are issued they become a liability in the company accounts which means they reduce the company profit which means the airline pays less tax. Over the years this liability must get to a very high figure which will never in fact be expended because we cant get to use our miles in the first place because the airline stops us and controls that expenditure. In other words it is a massive tax saving to the airline.
Perhaps the |Government should investigate these schemes where we are it seems given a gift that cannot be used whilst they get tax saving on that same gift that will probably never be used.

Before you start calling HMRC or writing to your MP, the liability is on the balance sheet, not the P&L. They don't recognise the "loss" of this liability until the miles are redeemed.

Airlines would not want to take their mileage liabilities as losses, and if anything historically they have under-provided the mileage liabilities on the balance sheet. I can assure you Virgin have found other ways to avoid being profitable over the years, few of them deliberate.