Inland revenue to tax a/c syndicates?

[jayemm]

I've been hearing ugly rumours that the Inland Revenue is going to tax a/c syndicates as 'benefit in kind' like a car owned by a company - even if they are wholly funded by the shareholders - does anyone know about this?

[Fuji Abound]

There is a possibility that if a syndicate operates as a limited liability company the Inland Revenue could follow this course of action. There would appear to be no risk where the syndicate operates as a "partnership" at this time, always assuming that the "partnership" does not realise a profit on its activities. In such matters the Inland Revenue are really very helpful and reasonable people and if this is a concern you would do as well to explain the circumstances to one of their officers and I suspect would be able to reach agrement between you.

[Final 3 Greens]

Fuji

PLease don't answer if this is professionally tricky, but if the company was limited by guarantee, would this alter things?

[flickoff]

The benefit in kind bit is the problem with companies if you are a director or even a shadow director, as it is possible for the IR to impute a tax charge based on 20% of, broadly, the value of the a/c plus any other cost incurred by the company in providing you with the benefit of the a/c. This can be avoided by paying the company the going rate for the use of the aircraft. Any small amount of corporation tax on any resulting profit should be much less than the personal income tax on the benefit. As you presumably own the company alone or with others, the funds contributed will go to overhead cost or if they are excessivley large could be distributed.If they are excessive you are presumable charging yourself more than the going rate.

There is also a similar problem if you are not a director but a shareholder as the same type of liability occurs by way of a distribution to participators (broadly the shareholders. Different section of the Taxes Act but the same basic idea.

If the compnay is limited by Guarrantee the BIK on the directors is the same. I don't know of the top of my head about the distribution to participators if you are not a director - I'll look it up.

Perhaps one way of preserving limited liability might be to use a Limited Liability Partnership, which are a new thing in the UK. You could also I suppose use a trust but this get expensive and complicated.

I operate an A/c through a limited company, although the a/c is owned personally by the directors. The company is merely the operating vehicle and we pay it a market rate for operating the a/c. This also enabled us to recover lots of VAT but that's another thing.

If you want any more on this, shout.

F/o

[Final 3 Greens]

Flickoff

Many thanks for the info - very useful stuff.

F3G

[flickoff]

More on this. I read in my copy of Flyer Magazine that AOPA have agreed with the Inland Revenue that as most syndicates that operate via ltd coys do so for liability reason there is no benefit in kind. Excellent work AOPA if this is true. I shall be seeking a copy of the agreement asap.

Anyone from AOPA care to publish it chapter and verse ?