Self flying costs (hire/fuel) as a business expense?

[Superpilot]

Anybody a director of a UK Ltd and put their 'self flying' costs forward as expenses? I am still yet a PPL, should have the IR and CPL by the end of the year but that doesn't matter does it?

It turns out I have a good case for this, having recently developed an aviation related software package. I could easily claim I am flying to airports to market my product seeing that most people purchasng my product are based at airports! Anyone?

[A and C]

As long as it is a "real" business expence and not a joyride you should have no problems.

But beware if you are trying to pull the wool over the taxmans eyes you are into a whole world of hurt!

[Adam_]

If the company is paying for your flying, doesn't that mean you need a CPL?

I 'suggested' this to my accountant and she basically told me that the tax man would eat me alive if he ever found out, regardless of the license issues.

Edit: It's a shame I can't put it through the company as I could get the VAT back, as well as it being tax deductible. It would really take the edge off the costs :(.

[scooter boy]

These expenses are entirely legally tax deductible provided the aircraft is being used for business purposes. For example I flew from my backgarden to work here in Torquay this morning and will be flying home in a couple of hours - all entirely legit.

You do not need a CPL if you are flying yourself in a private capacity, although this may help to reduce your insurance premium.

I operate an R44 and M20-R through a VAT registered partnership - almost all my flying is work related and therefore claimed as an expense.

If you take the p11s though they will be all over you like a rash.

SB

[charliegolf]

Scooter,

No-one gets tax free home to work fuel or expenses- they are a benefit in kind. Only expenses from the workplace to 'other' workplaces would be claimable.

CG

[scooter boy]

CG, I also work from home,
SB

[IO540]

Scooter boy is exactly right.

Flying is a 100% legit business expense if done wholly for the purpose of the business.

So, you have to make sure every flight you do involves meeting up a supplier, a customer, delivering some goods, etc. And be prepared to support every flight with some paper evidence should HMRC query it at some date, years later.

You don't need a CPL for this. A CPL is needed if you are a "company pilot", with a contract of employment which requires you to fly. All the time you have the option of taking other transport, you can fly on a PPL, and this is good for both G-reg and N-reg.

A potential grey area is if the flight involves carrying goods or people not connected with your company's business.

Doing flying which is for private purposes, in a company owned aircraft, is a whole huge can of worms concerning Benefit in Kind. There are ways to do it but one has to have a very competent accountant (most street corner accountants are frankly a total waste of space for anything half involved) and has to do it in exactly the right way.

[On the Spot]

I'd love to do the same for my regular commutes to London but the advice was that the greedy B's would not accept my paying and claiming several times over the odds for a full fare scheduled ticket on the same route even if it was entirely business.

[IO540]

the greedy B's would not accept my paying and claiming several times over the odds for a full fare scheduled ticket on the same route even if it was entirely business

That's incorrect - there is no requirement to travel on business via the most economic means.

Only the totally ludicrous would not be allowed by HMRC e.g. travelling to a customer using a baloon.

[High Wing Drifter]

IO540 is correct. It's all explained here: http://www.caa.co.uk/docs/122/summary_of_public_transport.pdf

[On the Spot]

I think that the words my accountant suggested the greedy b's at HMRC refer to was "justifiable" and that I would find it hard to "justify" spending more than a full price, rip off, fare just to be able to fly myself the length of the country. Unless there were some other reasons of course. Other flying friends who do ude their aircraft on business have had matching experience i.e. where there was a suitable scehduled service HMRC have used that to argue and then not bothered where there was not. Trips from Scotland to Croatia being an example of the latter.

In the same vein it is difficult to "justify" claiming the training costs for an IR in order to make said trip safer and or more feasible.

Anyway I am all for getting a much back as possible so go for it when you get the chance.

[airborne_artist]

I would find it hard to "justify" spending more than a full price, rip off, fare just to be able to fly myself the length of the country.

The most obvious is convenience - scheduled is just that, whereas self-fly means you have (Wx and airfield allowing) total flexibility. Furthermore you don't have to book way in advance for a popular time/destination, and finally you can fly much closer to your destination in most cases.

[dublinpilot]

I could easily claim

If that is the road you have to go down, then don't bother. You will get yourself into a lot of trouble, and expense.

If you have a genuine need to use it, and that need is business, not personal enjoyment, and the costs you charge the business are real costs, then you shouldn't have a problem.

But if you need to invent stories to justify it, you'll regret it. Expect that when you have a revenue inspection, that this area will be looked at very closed, by an inspector who is very suspecious of it. You can expect your 'claim' to be examined in detail, so it better be true.

dp

[IO540]

I think that the words my accountant suggested the greedy b's at HMRC refer to was "justifiable" and that I would find it hard to "justify" spending more than a full price, rip off, fare just to be able to fly myself the length of the country. Unless there were some other reasons of course. Other flying friends who do ude their aircraft on business have had matching experience i.e. where there was a suitable scehduled service HMRC have used that to argue and then not bothered where there was not. Trips from Scotland to Croatia being an example of the latter.

Your accountant is completely wrong. If you have a business contact in Croatia then you can buy a £2.5M TBM850 right now, employ a couple of pilots, and fly it down there. There is no statutory requirement for the cost of travel to be comparable to an airline.

Your accountant is probably out of his depth (most are when it comes to real business) and is erring on the side of caution, partly because he doesn't know much, and partly because he suspects he has made mistakes in the past and doesn't want any of his clients to attract HMRC attention - HMRC are likely to hit a whole bunch of an accountant's clients one after the other if they find stupid mistakes that he did on somebody's accounts.

I know, because that is a good description of my accountant!

In the same vein it is difficult to "justify" claiming the training costs for an IR in order to make said trip safer and or more feasible.

That's different, but this is more complicated. I am not up on professional advice on this though so won't say much. I gather that claiming back training costs is a lot less of a problem if you never do any private flying.

[Fuji Abound]

IO540 has posted some really good information on this thread.

Take note of it - I can guarantee you he knows what he is talking about.

:)

PS how is the weather looking?

[Red Top Comanche]

While working for a client a few years ago, I had to make a lot of trips to suppliers all over the UK and I came to an agreement that they would pay me as if I had driven (using the standard routes and rates for their company) and they wouldn't ask how many wheels the vehicle had. it saved me staying in hotels and cheaper than trains.

:)Not strictly legit though.:)

[bladewashout]

IO540 is correct, I can add that my own approach to private flying with my personal-ltd-company owned aircraft is to issue myself or my other ltd-companies with invoices for hire at the same rate as I would rent it out on contract to an outsider (I lease it to a flying school for training and general commercial work).

Although that means you are paying VAT on your flying costs, you can legitimately claim all the maintenance and insurance within the aviation company, because nobody is flying for anything less than an "arms-length" negotiated price. You can recover the VAT invoiced to other personal ltd-companies and they can offset the expense against their profits. The trick is to own lots of small companies!

I bill between my companies for aircraft use: each different company bills the aviation company for occasional aircraft hire to and from specific, documented meetings or events. I also just bill myself for some purely personal flying on a regular basis, particularly when flights are taken at the weekend.

Bear in mind that the best you should hope for, if you are owning the aircraft through a company to offset costs, is a reduced cost through offsetting tax against expenses, ability to offset capital losses, and recovering VAT. There is no statutory requirement for your aviation company to make a profit (although if your company could *never* make a profit and is clearly just a tax-reduction vehicle, you can fall under General Anti-Avoidance legislation).

If you try to get everything done inside the one aviation company with a light aircraft and are not seen to have active clients and to pay for some private flying, then for most people, a small amount of detective work by the revenue will demonstrate this to be implausible. Be reasonable about charging yourself and you are into a grey area where the revenue can only argue about degrees of personal use, not strike out the whole arrangement. Inter-company billing for flights is quite hard for them to argue against, particularly if some of the other companies are not solely owned and controlled by the controlling directors of the aviation company.

You need a reasonably active contract with someone to show that you are leasing the aircraft to try to make money. That can be your own company but is preferably an independent third party.

BW

[RatherBeFlying]

One friend here in Canada has a company with several employees and flies his PA-28 on business. He documents everything. The tax auditor disallowed a few flights as they were more costly than the airlines; however he went to the auditors boss and got that reversed.

These days when security adds 2-3 hours to any scheduled flight, any same day return trip on a private a/c is pretty easy to justify. Aircraft make time for the owner and allow him to do more business and make more money. Many business owners work 60 hour weeks and do not have 4-6 extra hours in the day to stand in security lineups.

[IO540]

Bladewashout

There is a remaining problem with what you describe: HMRC can say that since the business could have never made a profit (their main evidence being that it never did make a profit ;) ) you are not entitled to rely on the exemption that all rental is at the same rate.

It would be OK if the business does actually make a profit but it's quite hard to do that without running the plane into the ground.

This is why most rental planes are old wrecks. There is no way to make the figures add up if you are renting out something decent.

Fuji

The Wx is cr*p down here in Croatia, freezing cold, but looks OK tomorrow for a flight to Crete. The b*gger is that I used up 2/3 of my oxygen bottle on the way down, FL150-190, and I have one whole bottle left, and there is still some way to go...

[Fuji Abound]

Fuji

The Wx is cr*p down here in Croatia, freezing cold, but looks OK tomorrow for a flight to Crete. The b*gger is that I used up 2/3 of my oxygen bottle on the way down, FL150-190, and I have one whole bottle left, and there is still some way to go...

Looks that way, with a bit of weather around tomorrow to the north. Just had a look at the Sigmet out of interest and you seem to be between the worst problem areas.

Coming back before Wednesday may be a bit lively.

[gcolyer]

Claiming the expense back is perfectly legal as IO540 says. I do it now and again if it is cost effective. When I so cost efective I do not mean that I cant there to my destination cheaper any other way.

I justify it by lost production/business wasted during travel. Good example is getting to Lille. If you drive it takes about 7 hours from Bristol, if I have 1 day of business in Lille I loose 2 days of business time whilst I fanny about travelling. If I fly myself I can do it in 2 hours from Bristol, fair enought the cost of the flight is about the same as driving and train/ferry but my company benefit from having me on the ground for business for 2 extra days. That usually pleases the powers to be to authorise me to fly myself.

I am able to claim back the cost of aircraft rental, fuel, landing fees and parking fees. Like I say I don't do it to often...about 10 hours since may.

[Fuji Abound]

I find it strange that so many people think the Inland Revenue have a view on how we wish to get from A to B. If they really had a view Concord would have been grounded years ago and we would all have resigned ourselves to sleezyjet.

[IO540]

If there was a requirement to travel using the cheapest method, we would all be hitch-hiking ;)

But yes it's amazing how many people really believe this.