Briefly, this is a tax on assets owned by a limited company, calculated as a benefit equal to 20% of the purchase cost (or market value?) of the asset, each year. Quite a potential problem for groups operating an aircraft inside a limited company.
I know a number of groups have done individual deals with the Revenue on this. I also found a post here by "overclock" of 12th January 2004 suggesting that UK AOPA did a deal with the Revenue to exempt aircraft groups from BIK tax, subject to certain exemptions. I found this in an old note which I still have. I am not a member of AOPA - does anybody know any more details on this deal?
The standard Revenue web page which has been fairly widely relied on is
http://www.hmrc.gov.uk/manuals/senew/SE21004.htm
which is pretty clear, but the Revenue likes to wash their hands of this page, saying it applies only to a business which can be proven (retrospectively, obviously) to have been set up to make a profit. This conflicts with the "AOPA deal" mentioned above.