Claiming VAT back on a type rating???

[raspberry]

Hello,

At the present time I am a self-employed Flying Instructor. Can anybody tell me if it is possible to claim the VAT back on a self-funded type rating if I was to become VAT registered?

[Johe02]

I went to a tribunal on a similar one to this. It turned out to be a test case and I was moderately successful. The ruling was I could claim VAT back from my flying up to 3 years prior to my first flying related invoice. I had already been VAT registered for years.

Are you already registered?

Have you done the type rating?

[raspberry]

Hi Johe 02,

Thanks for the reply. I am not yet VAT registered, and I intend to start the rating in the New Year, being able to claim the VAT back would be a big help. Have you done a type rating and claimed the VAT back? Or was it just for flying lessons?

[Johe02]

I charge VAT and therefore claim everything to do with flying (that contains VAT) back.

[Spinningtop]

Raspberry,
If you become VAT registered I think you could claim the VAT back on your type rating, but you would have to charge your students VAT on their flying lessons, therefore increasing the cost to them or decreasing your pay.

I'm not an accountant , just looked into the VAT aspect before starting my training.

[Half_Cuban]

No the flying school charges the customer (including vat)

The instructor invoices the flying school including vat

The flying school then claims this vat back during their three monthly returns.

[Spinningtop]

Cheers Half Cuban!!

I wasn't sure how he worked it out with the flying school, you learn something new everyday!!

Spinningtop.

[long final]

Half Cuban

What happens if you are a direct employee of the school? In this case you are paid directly and do not invoice for VAT.

This thread pops up periodically, and I have never been able to decide if there is a hard ruling on this with HM C&E.

Has anyone any definitive information regarding the C&E position on flight training?

Better give the accountant a ring :uhoh:

Johe02 - Did you claim any/all of your training VAT back, or just VAT relevant to paid employment?

Regards
LF

[TFMonty]

It is bad enough that we have the only educational course in the country that VAT is charged on in the 1st place

[Re-Heat]

I'll have a look into it, but I'm an audit accountant, not a tax accountant.

I was however under the impression that flying was VATable, since the Chancellor deemed that all flying training was the pursuit of the rich and wealthy as leisure, despite of course CPL and ATPL being professional.

Obviously there is something wrong with that reasoning, as Johe02 has a different account, however being VAT registered as a person and not an entity does, I believe, entail some problems if things are not done by the book.

If you are the direct employee, you are definitively not able to claim VAT, since by rights, you are not an outside consultant, and the majority of the working year will be spent working as an instructor. If however it was freelance work, going from school to school, some surely could be claimed back in respect of training, and additionally VAT charged.

Basically if HMC&E say there is a hard ruling, or indeed do the Inland Revenue, double check, since they do not have the best reputation for wholly honest and impartial advice. Indeed check your tax return, as they are invariably wrong!

[TheDream]

This may help.

I already had a company which had been trading for a few years before I decided to get my fATPL. So we asked HM C&E if we could claim the VAT back if my company trained me to become a commercial pilot. The answer was yes as long as the company then charged my services out.

So after this conversation with my local office on the advice of my accountant we got it in writing as well. My company now charges me out as a commercial pilot and we are several £K better off.

Not sure how you go on if you don't already have a company set up. My accountant is a top bloke as we have kids he told us to fill in the working family tax credit. I filled it in not expecting much, did I get a surprise.

It all helps pay for the dream.

Cheers
TD