Buying aircraft through a company - pros and cons

[CBG]

I'd appreciate any advice on the following:

I am in the process of buying an aircraft. I can do it in my own personal name or through a small company I have set up to run a small Public Affairs business.

Most of my flying will be leisure but, given that I can work from anywhere and that I have to travel to Brussels, Paris, etc for work, I could justify flying myself on business.

Would any of you have any wiews on the pros and cons of buying the plane through the company?

Thanks in advance

[Sensible]

Go talk to a GOOD accountant, aircraft and cars I believe are one and the same and the taxation on private use makes it cheaper to own it oneself rather than suffer the "benefit in kind" I find it cheaper to own the car which I drive rather than have the company provide it. The concept of the I.R. paying for the luxury car/airplane is good but the reality is altogether different.

[Tinstaafl]

What if the company charged you for your private use sufficient to at least cover costs or even a (very) small profit?

[IO540]

This has come up before and looking up those threads might be useful.

The Inland Revenue regs are such that private use must be fully reimbursed.

One can also claim back the original purchase VAT (a LOT of money, enough to pay for years of flying) and ongoing VAT. This requires the plane to be run as a commercial operation, which in effect means either using it purely for business travel, or renting it out, and for the latter one would dig up a number of careful pilots.

For liability purposes, there is no point in Ltd Co ownership if the same owner is always the pilot. If people do rent it, that's a different matter.

The big benefit of ltd co ownership is that one can write down the depreciation in the company, and if that company is a subsidiary of one'smain business then it saves a lot of corp tax. After a few years, the plane is worth a ot less and the individual can close down the company, refund the VAT on the current market value, and go 'private'.

An accountant familiar with clients that run yachts and such is essential.

[Sensible]

But don't forget that when you rent it out to yourself included, you have to pay + VAT. Also, your public affairs company needs to be run squeaky clean because a stunt like charging an aircraft to the company if it is an obvious tax avoidance scam is likely to get the VAT inspectors taking more than a superficial look at your other "claims"

[IO540]

Yes, if you rent a plane from a VAT registered inividual or corporate body then they have to invoice you for VAT.

However nobody can touch a setup where a plane is used solely for business flights. Neither the Revenue nor Customs have the authority to challenge the method used for business travel. If they could, everybody would be forced to walk, use a train, fly Ryanair, etc.

And plenty of private pilots fly entirely on business. I expect some of them do have to make an extra effort to find a business contact near their holiday destination :O But if done right, it cannot be challenged.

It is the scenarios in between that present a challenge.

I don't think there is any way that somebody can do wholly or mostly private use, on a company owned aircraft, without getting turned over eventually. Renting it out helps a lot - in effect, you build an informal group around it where the rest just rent it; this needs a booking website (or other system) on which the owner pilot does NOT have booking priority, and the owner pilot must get invoiced by the company at a rate no lower than what the outsiders pay.

If the owner pilot doesn't want others renting it, then he has a big problem. He better do a lot of business flying....

If renting, ltd co ownership is desirable and that ltd co should not be the same one as the owner pilot's main business. That way, if one of the renters wrecks the plane and causes huge 3rd party damage, and the insurnace for some reason doesn't pay out, the plane-owning ltd co can be placed into liquidation and the owner pilot's livelihood is protected.

I am not an accountant but have gone into this in some detail.

[LowNSlow]

After the five years of arseache I got from the revenue over a Cessna I ran through my company I wouldn't recommend it. I rented it out to a few different flying clubs, I even didn't fly it myself for one 12 month period. I didn't get penalised in the end but the possibility of a big bill with the Revenue was definitely on the cards.

[A and C]

I have had no problems so far with the tax man but my company leases the aircraft (dry) to a club and is clearly a commercial undertaking.

The only time that I fly the aircraft is when taking them to and from maintenance checks and I do have an another aircraft that is used only for private use and is not run by the company.

I have found that if you are honest and open with the tax man you will have no problems and some times they are even helpfull but if you are "trying it on" with them you are in for trouble after all they have nothing better to do all day than chase people who don't want to pay the tax that is due !.

[Hairyplane]

My Robin G-HAIR is owned by my company and is a very useful business tool. I agree that it does pay to be completely open and honest with The Revenue. In my case, I agreed a percentage business use and pay for my private use at the end of the year by way of apportionment of the costs.

The VAT reclaim was a great saving too.

My aircraft is also a flying billboard and the registration - clearly connected with my business - proved a very worthwhile investment at £200 for it served to reinforce the business use.

It also helps that I have other aircraft in my private ownership.

I bought the aircraft new in 01 and it remains a pristine, low houred machine. It is thereofre worth a lot more than its written-down value.

I can have a (regular) meeting in Essex from Warwickshire and get back before midday. If we drove it would write off a day for me and my (very expensive) colleagues.

So, if you can justify it - and I can in spades - go for it.

I think if success had come sooner for me I would consider a helicopter but 27 years of fixed wing is a powerful 'old dog new tricks' concern.

I don't completely rule it out though....

If did, it would have to be a 4-seater, probably a turbine-powered machine.

Anybody out there with a lot of patience and skill want to teach me to fly one?

HP