€36,000 sounds awfully steep !!
Regarding the CofFC it is a nightmare. We are tackling this problem at the moment. Our aeroplane is G reg and has been in FC since 1979. It crashed in 2009 and was being sold as a pile of scrap (not subject to VAT) and we bought it and decided to rebuild it. All of our rebuild costs attract VAT - Engine zero time, new prop, repairs, etc...so effectively VAT has been paid on all of it apart from the initial £6000 which we paid for the "scrap" - VAT is zero rated on scrap so effectively ALL vat has been paid.
So how the heck do we get a letter from HMRC stating the aeroplane is in FC? It clearly was before the accident and since the accident additional VAT to the tune of about £8500 has been paid to bring it from scrap to an aeroplane. Customs are not interested and you get thrust from left to right with no one giving a proper answer. We asked:
XXXXX and I purchased G-XXXX, a Rockwell Commander Serial number 1XXXX, in October 2009. The aircraft was subject to a complete write off after a landing accident. We bought the airplane as salvage for £XXXX from Global Aerospace, who disposed of the aircraft remains on behalf of the previous insurers. Prior to the total loss G-XXXX was based in the UK / EU, since 25.07.1980, and was considered to be in free circulation within the EU.
We have since been rebuilding and upgrading the airplane to an airworthy state, utilizing UK based maintenance and repair facilities. VAT is payable on all the new parts, labour, and services involved in the repair, as appropriate.
We understand that VAT was not payable on purchasing salvage. As such we would be grateful if you would confirm that, once the airplane has been rebuilt to an airworthy condition, that there is no further VAT liability on the airplane and that she will remain in free circulation within the EU.
I have enclosed the original purchase invoice from Global Aerospace, and VAT invoices with details of VAT paid on the repair to date. I also enclose the complete registration history of G-XXXX since 1980.
Their response was: -
"Our public notice 700/6 advises HMRC will not give rulings where we believe that the point has been covered by our Notices or other published guidance; instead we will refer you to the relevant publication and indicate where you will find the answer.
I believe there is sufficient public guidance which covers your enquiry. I will address the issues you raise with reference to our Public Notice 744C (Ships, Aircraft and associated services
3.3 What is a "qualifying aircraft"?
A "qualifying aircraft" is legally defined as any aircraft of a weight of not less than 8,000kg which is neither designed nor adapted for use for recreation or pleasure.
The weight is its authorised maximum take-off weight. This is specified:
■for civil aircraft - in the certificate of airworthiness in force for the aircraft; and
■for military aircraft – in the released documents issued by the Ministry of Defence.
If there is no certificate or release documents, you should contact our National Advice Service for advice.
In summary as long as you are satisfied that you are making the supply of a qualifying aircraft then you will normally zero rate that supply. However if you believe that that supply does not meet the definition as a qualifying aircraft then you should normally charge VAT at the standard rate."
I simply asked them if there was any VAT to pay ...
