Tax Relief on training costs

[Whitstle_Blower]

Rulings

Guys,

What everyone is putting here is correct, there has not to my knowledge been a ruling on this from HMRC.

In theory cost can be claimed back as stated and in the conditions above. Also with regards to VAT, this too can be claimed as long as you are charging your customers as well, and you are VAT registered at the time of rating purchace.

The problem that may be encountered is that should someone request a ruling, or and audit/investigation take place on a contract pilot in these conditions, then mark my words, HMRC are very good at finding information, and sure as damn it, this thread would appear somewhere within the case notes.

Be very careful as to what you put down here, and don't state things as 'matter of fact' unless you are 100% certain.

Ltd companies are covered by IR35 due to the capital gains tax that is charged at 20% of company profit. The reason this is here is to stop one person, (MR. A), registering themselves as the Director, Employee, AND Share holder.
This means "MR.A" gives himself a salary as director....(allows the company to pay £5225 per year salary which covers the NI stamp for the year at no cost, plus is in the 0% tax bracket).
"Mr A" can also be the Employee, who claims all the expenses but not salary. (Expenses are not taxable).
All the money that is left is classed as "Company Profit". This means that at Divident time, the payout to the share holders....("Mr. A"), is only taxed at 20%. Should this have been paid in salary then it would have been taxed upto 40%.
So, this is completly IR35.
The only way round this is to calculate your total earnings per year in advance. (Say working on 75 hours per month flying). Then this means you pay normal personal tax on majority of the company earnings as this is salary. Then legitimately at the end of the year, your company could have made profit if say you actually worked an average of 80 hours per month. This can legitimately be claimed as a divident and to the best of your ability, you have been working outside the IR35 rules.
Less tax efficient, but more efficient then being caught for "Aggressive tax evasion".
Don't forget, you can also run the company at a loss per year. This is not illegal. Say you only work average of 70 hours a month instead of 75. Salary must be paid at the agreed rate, so technically the company has not enough money coming in to make a profit. Role over the loss to the following year, change the amount the director earns in salary, and off you go. The thing you are trying to do is run the company efficiently within the rules. If the company breaks even, that is not a bad thing at all.
Like i have said in another thread. Make sure that your description of the company is broad enough to allow you to earn from other incomes. Try and make sure you have more then 1 income. IF you can find 3 different streams of income then this is perfect. Something like:-
1 = Contract pilot on long term contract at 15-20 days a month
2 = PPL ground school tutor 2 days a month. (Go to a flying club and offer your services to explain PPL subject for £5 an hour, 2 hours per night)
3 = Factory worker 2 days a month
This shows that you are earning from other areas, and not soley employed by the one contract agent. Remember, if you provide services, make sure that the brief is broad enough to allow things like factory workable to be a fairly logical stream of income.

Only problem is, you are a sevice company working for one customer. Technically, you are an employee of that customer if you do not have a finite contractually agreed amount of work.

Slightly off topic but all fairly important information to take note of if you are wanting to try and claim back tax, vat, or right off expenses through either Sole Trader or Ltd Company.

ps - I hope you're not really 'soul' trader. My Soul just isn't for sale so you can't have it. And if you are thinking about anyone at BRK, none of them have a soul for you to trade!!