Can you reclaim the VAT and/or tax on training costs?
Join Date: Nov 2005
Location: Belgium
Age: 60
Posts: 494
Likes: 0
Received 0 Likes
on
0 Posts
Commercial pilots are pilots not business men. I personally couldn't be bothered by the whole VAT thing, so I went to the US and did my training for a fraction of the cost in Europe.
Join Date: Mar 2006
Location: Land of damp and drizzle
Posts: 608
Likes: 0
Received 0 Likes
on
0 Posts
Would you trust someone who's only connection to aviation was that he flew model helicopters to take your children flying? Of course not (I hope)! So why would you trust a bunch of people who (mostly) have no professional accounting experience to give you clear, unambiguous tax advice? If you want professional advice, pay a professional!
Ultimately, tax and taxation is not a black-and-white, simple thing. It's complicated by precedents and there is always some subjectivity. What worked for someone else may or may not work for you. The best you can do is make sure you understand the rules, do your best to play within those rules, and be prepared to defend your actions after the fact. I would suggest that given the amounts involved, the cost of some professional advice (which will take into account your specific resources and needs) is negligable. A better question to ask here might be, "can anyone recommend a decent accountant who can help with this?"
I applaud your go-getting attitude; finding the costs of helicopter training is massively difficult, especially if you don't have a first career to use as a step-up. However, the question you are asking has several complicated answers, and trying to find a way around this might find you investing more time, effort, and money than you might otherwise have done in the first place, had you accepted the complexity and worked with that.
Ultimately, tax and taxation is not a black-and-white, simple thing. It's complicated by precedents and there is always some subjectivity. What worked for someone else may or may not work for you. The best you can do is make sure you understand the rules, do your best to play within those rules, and be prepared to defend your actions after the fact. I would suggest that given the amounts involved, the cost of some professional advice (which will take into account your specific resources and needs) is negligable. A better question to ask here might be, "can anyone recommend a decent accountant who can help with this?"
I applaud your go-getting attitude; finding the costs of helicopter training is massively difficult, especially if you don't have a first career to use as a step-up. However, the question you are asking has several complicated answers, and trying to find a way around this might find you investing more time, effort, and money than you might otherwise have done in the first place, had you accepted the complexity and worked with that.
Join Date: Aug 2010
Location: uk
Posts: 15
Likes: 0
Received 0 Likes
on
0 Posts
Professionals dont know either. Its luck of the draw and a lot of contributors to this thread have had to fight it out at a tribunal....most appear to have lost. Thats why it is important to ask those who have reclaimed, how. Also to find out what went wrong with those that had a hard time.
If the community get this right, all schools can then give rock solid strategies rather than sell only the hope of a lower training cost. Remember, the difference in reclaiming £15,000 / £20,000 of vat, is the difference to getting UK training or US training. Or adding an FI ticket to your CPL, or a whole bunch of Jet Ranger hours etc.
The vat question is that important. I do not think it is good that all trainees consult their various accountants,across the country. All researchingthe same question,and all coming out with random answers. Surely one or two national strategies would confound the attempts of the vat man in winning the appeals.
Not wanting to become a bother on this thread, I will let you know how my plans develop in a few weeks time.
If the community get this right, all schools can then give rock solid strategies rather than sell only the hope of a lower training cost. Remember, the difference in reclaiming £15,000 / £20,000 of vat, is the difference to getting UK training or US training. Or adding an FI ticket to your CPL, or a whole bunch of Jet Ranger hours etc.
The vat question is that important. I do not think it is good that all trainees consult their various accountants,across the country. All researchingthe same question,and all coming out with random answers. Surely one or two national strategies would confound the attempts of the vat man in winning the appeals.
Not wanting to become a bother on this thread, I will let you know how my plans develop in a few weeks time.
Hovering AND talking
Join Date: Feb 2003
Location: Propping up bars in the Lands of D H Lawrence and Bishop Bonner
Age: 59
Posts: 5,705
Likes: 0
Received 0 Likes
on
0 Posts
Everyone's personal tax and business circumstances are different and that is why all those who want to reclaim the VAT should seek professional advice. There is not, and cannot be, one definitive answer to all the myriad of questions that have been asked on this thread.
However, as a general rule ... yes, you cam reclaim UK VAT on UK CPL training if your subsequent business intention is to be self-employed in the UK after qualification.
Cheers
Whirls
However, as a general rule ... yes, you cam reclaim UK VAT on UK CPL training if your subsequent business intention is to be self-employed in the UK after qualification.
Cheers
Whirls
Join Date: Sep 2007
Location: On the Rump of Pendle Hill Lancashi
Posts: 614
Likes: 0
Received 0 Likes
on
0 Posts
I took definative advice from my Local Vat inspector, I was already Vat registered as a sole trader/Haulier, so the question was asked: I am going to use the SFH Heli to visit my wide(geographically) area of customers I will be doing this about once or twice per week, also collecting the odd visitor to show them what we do for others in similar trades(connected with International Road Haulage), Vat man checked with his head shed, and the answer came back: Any training or rental for SFH of heli that was connected with my business as long as I did not charge a fee( whic would be against the CAA rules) would be acceptable to allow full reclaim of all Vat charged to me, including any training costs, or books or exams.
So it came to pass, but I would advise anyone to check with your own VAT inspector and get it in writing, for they are well known for saying one thing when they mean another.
so as some briefs would say, "Caveat Emptor"
PeterR-B
Vfrpilotpb
So it came to pass, but I would advise anyone to check with your own VAT inspector and get it in writing, for they are well known for saying one thing when they mean another.
so as some briefs would say, "Caveat Emptor"
PeterR-B
Vfrpilotpb
Join Date: Nov 2009
Location: Flexible
Posts: 24
Likes: 0
Received 0 Likes
on
0 Posts
Hmmm ... 'grey areas'... what other outfit does that remind me of?
I actually think the VAT reclaim process is quite clear. I've reclaimed about £4000 of professional training costs from the VAT man.
Just ask yourself do I pay VAT on my training to become a professional pilot? If Yes then ask one further question.
Will I be working in a manner where I will be collecting VAT for my flying services/goods in the future (eg self employed)? If Yes again then the answer is you can apply to reclaim the VAT if you are VAT registered.
To become VAT registered you need to provide evidence that you are going to collect VAT on behalf of the tax man in the future. In my case it was easy. I just sent them some invoices that I had submitted as a freelance pilot and a photocopy of a cheque from my customer (the school I work for as a freelancer). If you are not already trading I'm guessing you'll need a business plan of some sort, but I didn't take this route.
The only real complications that I can see is that, as Whirlybird suggests, there is a time limit on how far back you can reclaim VAT before you are VAT registered. On goods it is 3 years and services is 6 months. Also if you don't end up collecting VAT for the tax man then they will ask for any refunds back!
Once trading you submit an online VAT return every month. This consists of half a dozen boxes. Nothing difficult, just how much VAT you have paid against how much VAT you have collected. I also claim my VAT on the petrol I use to get me to the airport. Take the difference between the two and you either hand some money over or you get a refund.
The monthly chore is a bit of a pain but the cheque was a nice little reward for my efforts. I didn't use an accountant just read this thread and did some research. Then I called the VAT helpline when I thought I knew what I was supposed to do. I was actually audited after I submitted my big claim but that was pretty painless because I had kept all my records and receipts.
I thought this thread was pretty straightforward compared to trying to get to grips with some of the CAA regulations! Thanks PPruners for an excellent thread.
Good luck with your venture Staywest. I think you need to read between the lines in this thread, remain positive and stay legal.
I actually think the VAT reclaim process is quite clear. I've reclaimed about £4000 of professional training costs from the VAT man.
Just ask yourself do I pay VAT on my training to become a professional pilot? If Yes then ask one further question.
Will I be working in a manner where I will be collecting VAT for my flying services/goods in the future (eg self employed)? If Yes again then the answer is you can apply to reclaim the VAT if you are VAT registered.
To become VAT registered you need to provide evidence that you are going to collect VAT on behalf of the tax man in the future. In my case it was easy. I just sent them some invoices that I had submitted as a freelance pilot and a photocopy of a cheque from my customer (the school I work for as a freelancer). If you are not already trading I'm guessing you'll need a business plan of some sort, but I didn't take this route.
The only real complications that I can see is that, as Whirlybird suggests, there is a time limit on how far back you can reclaim VAT before you are VAT registered. On goods it is 3 years and services is 6 months. Also if you don't end up collecting VAT for the tax man then they will ask for any refunds back!
Once trading you submit an online VAT return every month. This consists of half a dozen boxes. Nothing difficult, just how much VAT you have paid against how much VAT you have collected. I also claim my VAT on the petrol I use to get me to the airport. Take the difference between the two and you either hand some money over or you get a refund.
The monthly chore is a bit of a pain but the cheque was a nice little reward for my efforts. I didn't use an accountant just read this thread and did some research. Then I called the VAT helpline when I thought I knew what I was supposed to do. I was actually audited after I submitted my big claim but that was pretty painless because I had kept all my records and receipts.
I thought this thread was pretty straightforward compared to trying to get to grips with some of the CAA regulations! Thanks PPruners for an excellent thread.
Good luck with your venture Staywest. I think you need to read between the lines in this thread, remain positive and stay legal.
Last edited by Plain Torque; 25th Aug 2010 at 19:15.
The Original Whirly
Join Date: Feb 1999
Location: Belper, Derbyshire, UK
Posts: 4,326
Likes: 0
Received 0 Likes
on
0 Posts
Apologies, staywet. I had no intention of being inflammatory, but I see how it could read that way. That's what happens when I post when I'm tired.
It seems simple to me because it was. Maybe I was lucky. Or perhaps things have changed since I did my training. I agree with whoever suggested you gt professional advice; if there are so many differences between individuals, then you need help from an expert.
It seems simple to me because it was. Maybe I was lucky. Or perhaps things have changed since I did my training. I agree with whoever suggested you gt professional advice; if there are so many differences between individuals, then you need help from an expert.
Join Date: Jan 2008
Location: WSussex
Posts: 4
Likes: 0
Received 0 Likes
on
0 Posts
Claiming Tax on Training
Hi All
Wondering if any one has had any success in the last few years claiming training fees as expenses on their tax returns?
I see lots of threads regarding reclaiming VAT on training which I have successfully done. However have not seen any on the tax side of things.
After obtaining my PPL(H) I continued hour building in order to go on the CPL(H) course, then passed the CPL training and started charging for my time as a profession. The tax return was put in to include all of these training expenses and a week before the deadline the Inland Revenue decided to query it.
Has anyone had any experience of this? I would be grateful for any advice / comments.
Thanks
Wondering if any one has had any success in the last few years claiming training fees as expenses on their tax returns?
I see lots of threads regarding reclaiming VAT on training which I have successfully done. However have not seen any on the tax side of things.
After obtaining my PPL(H) I continued hour building in order to go on the CPL(H) course, then passed the CPL training and started charging for my time as a profession. The tax return was put in to include all of these training expenses and a week before the deadline the Inland Revenue decided to query it.
Has anyone had any experience of this? I would be grateful for any advice / comments.
Thanks
Guest
Posts: n/a
I set up a VAT registered company the day I qualified, and billed my CPL and FI courses to it. I use that company to bill for my time. I think you're allowed to take service costs of company setup from up to six months before incorporation, and cost of goods (eg. ATPL groundschool books) from up to two years before.
Seemples.
Seemples.
Join Date: Mar 2010
Location: Up North
Age: 57
Posts: 557
Likes: 0
Received 0 Likes
on
0 Posts
After I did my CPL(A) and instructor rating, submitted my first tax return as a self-employed sole-trader, tried to claim the costs of the training courses and tests to offset against income tax. Was summoned to the local tax office and told that the initial cost of obtaining a qualification couldn't be claimed, but once you had it, anything to keep it valid was acceptable. Can't see them making any difference between fixed wing and rotary. Seems like setting up a company is a better way to do it.
Join Date: Oct 2011
Location: West Sussex
Posts: 1
Likes: 0
Received 0 Likes
on
0 Posts
Financing CPL Training
Hi I am about to start CPL Training and I am planning on self financing it through loans etc. I have been advised to register as a Ltd company and get Vat registered, so that I can claim the vat back . Has anyone got any experience of this and how it works ? Any advice would be appreciated ?
Join Date: Mar 2006
Location: Land of damp and drizzle
Posts: 608
Likes: 0
Received 0 Likes
on
0 Posts
See the whole thread above, but in summary:
You can register a limited company and reclaim the VAT on professional training (so not the PPL part). However, you need to be planning to work as a professional pilot and to charge VAT through your limited company for said work. This means that if your game plan is to get your CPL and IR, reclaim the VAT, and then go job hunting on the North Sea, you are going to have a problem.
You can register a limited company and reclaim the VAT on professional training (so not the PPL part). However, you need to be planning to work as a professional pilot and to charge VAT through your limited company for said work. This means that if your game plan is to get your CPL and IR, reclaim the VAT, and then go job hunting on the North Sea, you are going to have a problem.
Join Date: Aug 2004
Location: Aberdeenshire
Posts: 217
Likes: 0
Received 0 Likes
on
0 Posts
I was lucky enough to claim the VAT on my PPL as it was considered to be part of the process of becoming a professional pilot.
I had given up a well paid job, started training intensively in the UK to get through as quickly as possible and presented an outline 3 year plan (obviously partly guesswork at that stage) which detailed the first 3 years of my self employment as a pilot.
On top of which I sought professional advice who negotiated with the tax office on my behalf. It's a bit hazy but perhaps the professional advice was about a £1,000 in the first year.
All (well, the majority) my costs of gaining my ratings, through to IR eventually were allowed to be offset against my earnings, which ended up being about 3 years of offset against income tax.
The Accountant did my tax returns, I put in the invoices/costs to him quarterly and he tidied them up and did the necessary.
Some people have not been able to claim as much as this, but an early professional dialogue with the tax/vat office from day 1 seemed to have paid dividends for me.
The money spent with the accountant saved me thousands down the line.
I had given up a well paid job, started training intensively in the UK to get through as quickly as possible and presented an outline 3 year plan (obviously partly guesswork at that stage) which detailed the first 3 years of my self employment as a pilot.
On top of which I sought professional advice who negotiated with the tax office on my behalf. It's a bit hazy but perhaps the professional advice was about a £1,000 in the first year.
All (well, the majority) my costs of gaining my ratings, through to IR eventually were allowed to be offset against my earnings, which ended up being about 3 years of offset against income tax.
The Accountant did my tax returns, I put in the invoices/costs to him quarterly and he tidied them up and did the necessary.
Some people have not been able to claim as much as this, but an early professional dialogue with the tax/vat office from day 1 seemed to have paid dividends for me.
The money spent with the accountant saved me thousands down the line.
Join Date: Apr 2003
Location: Gibraltar
Posts: 10
Likes: 0
Received 0 Likes
on
0 Posts
VAT reclaim for overseas students
Does anyone have any useful input on the legitimacy of claiming VAT on training costs for overseas students. As a non U.K./E.U resident I am able to claim back VAT on goods purchased in U.K., but I don't see how I would be able claim the VAT back on my CPL training.
Are there any overseas students out there that have trained in U.K. and been able to recoup VAT successfully?
Are there any overseas students out there that have trained in U.K. and been able to recoup VAT successfully?
Join Date: Jan 2010
Location: Midlands
Age: 78
Posts: 119
Likes: 0
Received 0 Likes
on
0 Posts
I only just caught up with this thread, so I apologise if I am repeating anything, but I can speak from (UK resident) experience.
You do not need to be a limited company to register for VAT. Being a sole trader is fine and has advantages in that tax returns are easy and can be done by yourself, while those for Limited Companies are more complex and really do need a professional advisor to ensure they are correct. £1000 for the first year is a bit steep in the current market, but not by too much.
The difficulty is persuading HMRC to allow you to register for VAT. We needed a letter from the flying school saying that he was completing a Commercial course, and that there was good employment opportunities with this qualification (it was a few years ago!). We could then claim back the VAT paid to the training school every three months. We also built up a significant trading loss (obviously) in that period which we entered as part of the annual the self assessment on-line tax return. The rules are that you can carry forward losses from previous years to offset profit in subsequent years so, for the first year or so when there were significant earnings, this reduced the tax liability to zero. However, there is a time limit on how long you can do this for.
Being VAT registered, you obviously need to charge VAT on your invoices (assuming you have stayed self employed) which you then offset against any VAT you have been charged on your expenses (OPC etc), and the rest you pay back to HMRC every three months. I recommend the Fixed Rate VAT scheme which saves bureaucracy and is normally financially beneficial also.
Finally keep very good records including every item of spend and income (spreadsheets are fine) and then, if you are unlucky enough to get a visit from HMRC, you should have no problem. The HMRC web site has loads of advice and guidance on all of these issues, so, like always, do your homework first.
Unfortunately, I cannot speak for overseas students.
You do not need to be a limited company to register for VAT. Being a sole trader is fine and has advantages in that tax returns are easy and can be done by yourself, while those for Limited Companies are more complex and really do need a professional advisor to ensure they are correct. £1000 for the first year is a bit steep in the current market, but not by too much.
The difficulty is persuading HMRC to allow you to register for VAT. We needed a letter from the flying school saying that he was completing a Commercial course, and that there was good employment opportunities with this qualification (it was a few years ago!). We could then claim back the VAT paid to the training school every three months. We also built up a significant trading loss (obviously) in that period which we entered as part of the annual the self assessment on-line tax return. The rules are that you can carry forward losses from previous years to offset profit in subsequent years so, for the first year or so when there were significant earnings, this reduced the tax liability to zero. However, there is a time limit on how long you can do this for.
Being VAT registered, you obviously need to charge VAT on your invoices (assuming you have stayed self employed) which you then offset against any VAT you have been charged on your expenses (OPC etc), and the rest you pay back to HMRC every three months. I recommend the Fixed Rate VAT scheme which saves bureaucracy and is normally financially beneficial also.
Finally keep very good records including every item of spend and income (spreadsheets are fine) and then, if you are unlucky enough to get a visit from HMRC, you should have no problem. The HMRC web site has loads of advice and guidance on all of these issues, so, like always, do your homework first.
Unfortunately, I cannot speak for overseas students.
I have a question on VAT reclaim. I have an accountant that says one issue is that the company can't be classed as trading until it has raised an invoice but obviously whilst training I can't raise an invocie for my services as I'd not be qualified. Any views?
Hovering AND talking
Join Date: Feb 2003
Location: Propping up bars in the Lands of D H Lawrence and Bishop Bonner
Age: 59
Posts: 5,705
Likes: 0
Received 0 Likes
on
0 Posts
Yes, get a new accountant. To be honest, I CBFA to look up the exact time limits but you can reclaim VAT on goods up to 6 months before trading and, for services (which flight training is) up to 3 months ... I might be wrong with the actual limits (they vary with the length of the Chancellor's foot) but I am correct in the principle.
Cheers
Whirls
Cheers
Whirls
Anybody able/willing to recommend an accountant to help me complete my PPL(H), ATPL(H), CPL(H) and then FI(H) or MEIR(H) with the least pain to my poor savings? Please PM if you don't want to publish on here, thanks in advance!