Hundreds of millions in UK aid returns to Treasury in VAT on asylum hotel bills

Exclusive: Payments underline absurdity of counting British accommodation as aid, say critics, and cost of application backlog

Hundreds of millions of pounds in British aid spending is returning to the Treasury each year in tax, thanks to the spiralling cost of housing asylum seekers in UK hotels.

The government says it is paying VAT on its bills for hotels to accommodate asylum seekers, while also classifying such spending towards its overseas development spending target.