Come on HMRC
ALEXA - A pleasure to finally have someone on the forum who knows what they are talking about!!! FIs have been ripped off and unprotected for years by unscrupulous RTFs and FTOs who know fully well that their "contractors" are actually "employees".
You very correctly pointed out the relevant references within IR35 and yet the forum trend seems to be to ignore the fact that the primary consideration here is that of the liability and relationship of the FTO to the customer/student and most importantly the fact that the FTO own the aircraft.
It is clear that FTOs/RTFs are not acting as agents of the FI/TRI. This in my view is inescapable and any attempt to change the status quo by the FI renting the equipment ala the shoe shine example would be defeated as the HMRC would simply see it as trying to put substance over form.
The facts are pretty simple. FIs are highly UNLIKELY to be able to convince HMRC that they are self employed and rightly so IMHO.
FTOs and RTFs get over it. If you want to run a business one of the main costs is staff and in this sort of business you want professional, well trained staff. Pay them a salary or admit that your business is not financially viable. Just because you (the school) may not earn any revenue due to bad weather, changes in the market does not give you the right to shift all the liability to your 'employees'. If you owned a shop and bought loads of stock and the market conditions changed your footfall and nobody bought your stock it doesn't mean that you can not pay your staff.
I hope the HMRC wipe the floor with the FTOs and RTFs in this country that refuse to stand up to their responsibilities and salary their FIs preferably for what they are worth.
If this means that some schools close and that there is less work out there then at least that work will hopefully give some instructors the ability to earn a real living as professional instructors as opposed to lots of instructors earning barely enough to feed themselves. I'm with mad jock on this I hope the HMRC gives them a wake up call and that some of them even go out of business. After the fall out the GA market will be a smaller but better place for FIs to work. It isn't all about giving the cheapest product to the general population if the general population cannot pay what it really costs to have professional instruction then they shouldn't fly.