PPL training: Tax deductible on your company ?

[sternone]

Hello,

I'm doing my PPL and changed schools recently (thanks to PPRUNE). This new much more professional school is able to create invoices, the first school i was in was a sort of club who can't make invoices (Belgium VZW)

Now i have a business so i can throw those invoices in because i will fly for business in the future. So for me it's tax deductible. The problem is that the tax office is saying that this is a problem since it's a PPL.. they mean: the PRIVATE in the name PPL bothers them alot, they say a PRIVATE training cannot be tax deductible. They said litterally to me: if you would follow a ATPL i would be able to deduct it completely 100% !!!!

Any advice ?

Thanks

[Dysonsphere]

I think its been tried and it dosnt work

[Piltdown Man]

And the costs of obtaining an ATPL aren't capable of being offset against tax either. But leadership training is, as is "personnel technical improvement courses" etc. So, make sure that you are not going flying for flying's sake and that the flying bit is just a sideshow to the real training. Such a course should be obtained via a reputable training organisation (maybe one associated with your organisation, for instance) and no nasty invoices which could be missunderstood should be in your office.
PM

[Fuji Abound]

I have no idea about this aspect of tax in Brussels (if that is the jurstiction in which you operate). However, if in doubt, the fee of a good accountant would be worth its cost compared with the potential tax relief.

I can well imagine a tax authority being "hung up" on the use of the term private. These issues often arise from a mis understanding of a technical subject - it is important to appreciate the person you are dealing with may have no experience in this area.

You might do well to explain that the term "private" derives from an intention to convey that the license is for your personal use, as opposed to enabling you to provide your services for higher or reward to others. You may well use your license exclusively as a means of enabling you to transport yourself for the conduct of your business. If this were so you might convince your tax authority that the expense was deductable.

[thirtysomething]

Show them the syllabus for the modular ATPL.

[IO540]

I am not an accountant but can't see why not, in a specific scenario where you will be flying exclusively on the business of your company (which a PPL can do) and will not be doing any private flying.

In any case, I would keep the receipts.

[High Wing Drifter]

And the costs of obtaining an ATPL aren't capable of being offset against tax either.
For all practical scenarios I believe that is the case. I do believe that there is a scenario along the lines that if you have a contract in place then at least some of the costs of going commercial can be claimed. But speculative training is quite rightly (IMHO of course) not deductible.

[BackPacker]

What you would need to do is find the Belgium law articles that compare to article 160/161 of the UK ANO, which specifically state that if you fly for a business purpose, but the flying is only incidental to the business purpose (in other words there have to be alternatives to flying to your destination, eg. commercial air), then the company is able to reimburse you 100%, even if you only hold a PPL. Combine that with the fact that you are the director of your company, or the company releases a statement that they indeed intend to reimburse you this way, and I can see no reason why it should not be tax deductible.

But I think the most important thing is that you convince the tax officer that a "Private" pilots license does not automatically mean you can't use it for "Business" at all. You can't make money with it, can't do aerial work, but you can use it for business travel.

[Mike Cross]

If it's anything like the UK you will have an uphill struggle. There's a general principle in UK law that the expenditure has to be "wholly and necessarily" incurred in the performance of your business.

They are likely to look to see if there is a good business justification for the expense, i.e. that flying yourself somewhere is the best or only way of getting you there. If you're looking at the company picking up the training costs as well they'll factor this into the costs of the anticipated travel as well.

There's also the issue of Benefit in Kind. They may well argue that you are receiving a benefit in kind and should be taxed on it. For example in the UK if you have a company car and it is made available to you for private use (e.g. to travel to and from your place of work) then that is a benefit in kind, on which you get taxed. They may well say that the training is for a licence that is principally for private use and that the business application is incidental.

Even in big business you're likely to find that a corporate aircraft that's used exclusively by the CEO and not available to other staff for business use might attract attention.

[IO540]

I agree with Mike Cross above.

The BIK issue is the biggest one, because a business owner has inevitable private access to the plane - simply because he controls the business and can do what he likes. This is the case even if he never actually flies privately.

I believe the only good solution in that case is to agree with his local inspector that the flying will be 100% for business, or perhaps 75% for business and do a tax deal on that basis. Quite a few people in the UK have done such deals - they are not advertised on pprune and are particular to that inspector.

And if the pilot is not the business owner then he can't (as a PPL) be flying "necessarily" on his company business because the UK ANO requires that he is not contractually required to FLY.

It's a bit of a rock or a hard place.

With a CPL or ATPL one could swing it because then (under the UK ANO) you can be contractually required to fly i.e. you can be a company pilot. But then if you do any private flying too you are back into the dodgy BIK territory with HMRC. And if you are the business owner it doesn't matter whether you actually do any private flying - the mere theoretical access to the plane is enough to get hit on BIK. With an employee you can put a private flying ban into his contract of employment (thus protecting him from a BIK attack) but this is less likely to work with a controlling director.

I've just received guidance note from the accountant suggesting that all staff contracts are modified to ban private use of PCs, to protect them from a BIK attack for the private use of a company PC :ugh: Gordon Brown must be having a field day up there.

I think it can be done but not without doing a deal up front with the inspector.

One needs a good accountant. Most "street corner" accountants are completely hopeless when it comes to this stuff, will get you into a right pickle, and when the ***t hits the fan with HMRC/BIK they send you a bill for their work and wash their hands of it. And don't I know it....

Re Belgium, I haven't got a clue but clearly he should be asking a Belgian accountant.

[Fuji Abound]

There is clear distinction between solely, exclusively and necessarily in terms of whether or not it is a limited company, and the usual fundamental misunderstanding about the Revenue having any wish to dictate the way you get from A to B. Fortunately, directors have the right to send their employees or themselves by Jetstream or by donkey as might suite their purpose.

There can be no beneift if the aircraft is only used for business. When there is duality there is a clear procedure for calculating the BIK that arises.

However, this thread appears to be about the position in Belgium not in the UK where the rules are fundamentally diffferent albeit their are some similarities in pinciple.

[Mike Cross]

I would expect the point about "wholly and necessarily" to have some validity.

For example if you decided to visit a customer by driving your car to Brands Hatch, doing a few laps round the circuit in one of their Formula Brands single seaters and then get back into your car to continue your journey they might take the view that the Brands Hatch bit was not "wholly and necessarily".

You're quite right though that there is a general presumption that it's OK so long as it is available to everyone. So a company jet that is used to transport company personnel around for business purposes is fine but a company jet that is supplied for the exclusive use of the proprietor and members of his family would be treated as a perk and taxed as BIK.

(I believe there's a certain person awaiting a verdict at the moment whose alleged crimes include using the corporate jet for a holiday with his wife and then sending it back to collect her favourite handbag which she'd forgotten to bring with her. (allegedly));)

[dublinpilot]

Mike,

Are you sure about the phrase "Wholly & necessarly"?

In Ireland, we have imported much of our basic tax code from the UK, and I thought this was one of the things we imported from the UK system.

However the phrase for business profits we use is "Wholly and exclusively". A business must show that the expenditure is "Wholly and exclusively incurred for the purpose of the business". The necessarly part only comes into play for an employee looking to claim expenses against their salary. The employee must show that the expenses are "Wholly, exclusively and necessarly incurred".

In any case, all this is irrelevant, as the question seems to be about Belgian tax, not UK tax.

dp

[IO540]

I remain confused by some posts here.

One is exposed to an attack on BIK through having private access to the company asset.

One doesn't actually have to use the asset privately to get taxed. This is quite bizzare in terms of justice but I am 100% sure it is how the law is.

As suggested, there are various defences, and some of them are easy (for employees, anyway, less easy for Directors) but in the "company plane" scenario one has to be pretty careful.

The "wholly and necessarily" is a separate issue. It means a business expense has to be a business expense. There is no requirement for the expense to be cost effective (except for blatent cases e.g. travelling to a customer using a baloon). If there was, nobody could fly (on business) 1st class or business class, etc, etc. There are plenty of business owners who fly everywhere, ensuring that they meet a customer or a supplier in every place they fly to, and this cannot be questioned by HMRC (they occassionally hit them, asking for copies of airport tower logs etc). A business owner is completely entitled to run his business into the ground.

[Whirlybird]

In the UK, if you are planning on getting a commercial license and being self-employed afterwards, you can claim back the VAT on your training. I've done it, and I had it confirmed by the VAT people themselves. No idea if you can do that in Belgium, but it's worh looking into.

[sternone]

In the UK, if you are planning on getting a commercial license and being self-employed afterwards, you can claim back the VAT on your training. I've done it, and I had it confirmed by the VAT people themselves. No idea if you can do that in Belgium, but it's worh looking into.

Yes, that is also the case, like i said, the tax department told me if i take a commercial license they approve it directly 100%, so not only the VAT but the complete sum including all side costs 100% tax-deductible.

I told them i did not need a commercial licence, only a PPL and after that an IR BUT since PPL takes the word PRIVATE in it, they said the can't approve PRIVATE training as a business costs!

[Fuji Abound]

I told them i did not need a commercial licence, only a PPL and after that an IR BUT since PPL takes the word PRIVATE in it, they said the can't approve PRIVATE training as a business costs!

I wonder who you told? If it was the IR, and you told them all the facts, then they may well have been wrong - "may well" because we dont know what information you gave them.

In the UK, if you are planning on getting a commercial license and being self-employed afterwards, you can claim back the VAT on your training.

Have a look at LON/92/404/A. Exactly this case came before the tribunal - the result - the appeal to recover the VAT was dismissed because the commercial pilot was not a taxable person.

I suspect the circumstances in which you were able to recover the input tax were quite different.

I have done this or that is often not very helpful in this arena. It is very easy to successfully achieve the result you would like by arranging your affairs in one way, and yet by changing a single element, fail miserably.