Oscar Duece
I think your drift re VAT is right... You can later buy the plane off the firm at the then market value. The company also has to repay the VAT at that point, but that's also calculated on the then market value. No need to liquidate the company as such. There may be a better way...
But it IS definitely worth trying to get the VAT back as the VAT on a new plane will pay for several years' flying!
Another angle is that instead of setting up a conventional syndicate, place the plane in a ltd co and rent it out to the other people (and to yourself of course). Aim to make a surplus, which you have to anyway to build the engine/prop fund etc. Then it's a business, and you claim back the VAT.
You do have to charge yourself the same rate as you charge others that fly it; this is a Inland Revenue requirement to avoid benefit in kind charge on private use of a corporate owned asset.
edited to add: The VAT registered company will have to charge VAT to its customers, but the total price charged to an individual will be no higher than if it wasn't VAT registered, because if it wasn't, it would have to pay VAT on its inputs which it cannot reclaim from C&E.
The advantage of NOT VAT registering is when e.g. a plumber isn't which gives him a slight competitive advantage because he doesn't have to charge VAT on the labour element of his supplies... this is irrelevant to the scenario discussed here.
Last edited by IO540; 19th April 2004 at 08:34.