What's the latest on the French hitting N-regs over VAT?

[IO540]

The sporadic reports of non-EU-reg aircraft getting turned over by the French, and less so by the Germans, looking for a Certificate of Free Circulation, or some other evidence of EU import VAT having been paid (such as the very hard to get C88 form) continue to surface.

The worst one I have heard was that of an N-reg TBM owner who flew to the Socata factory in France and got his by French Customs on the factory doorstep. He had to pay the VAT on the TBM, only to have it refunded several days later when he left the EU. This kind of thing can actually happen if the pilot/owner is an EU resident (if he was a real foreigner they could not touch him). Reportedly, Socata did a deal with their Customs after that to make sure it does not happen again. I tried to check this out with them but they did not comment.

That said, it has never happened to me (I have the papers anyway) nor to anybody I know directly personally. The reports are always at least 1 or 2 levels distant.

And, as of about 2005, UK Customs stopped issuing the CofFC totally. The Danish route, which delivered a CofFC as a part of the package, stopped Dec 2009.

Can anyone illuminate this, with a clear report of a French/German search which did not find a suitable document and what happened afterwards?

In most cases of "old" planes, there is no way at all of getting a CofFC. OTOH, wasn't there some VAT amnesty for planes imported into the UK before about 1985?

[Rod1]

The French have certainly tightened up. I recently flew to Abbeville to clear customs for a tour of France. We had provided all the notifications etc. A government helicopter followed us in with three customs guys. We were very politely asked for the aircraft documents and passports together with proof that we had notified them (I has the received fax conformations with me). They did not ask for licence or log book. Every document was scrutinised, and after 25min or so we were thanked for our cooperation and told all was in order. The aircraft is a UK registered homebuilt and the kit was French, VAT was not an issue, but I got the impression that if a single bit of paper had been missing we would have been swimming home.

Rod1

[IO540]

The French are not allowed to query the VAT status of an EU-reg plane, AIUI.

If they were not checking pilot licenses, what were they checking??

I take it your homebuilt being non-CofA requires PPR to fly in France so maybe that?

[Rod1]

“I take it your homebuilt being non-CofA requires PPR to fly in France so maybe that?”

No, no permission req for France, and non-asked for. They were only interested in the aircraft docs, Cert of Reg, Permit to fly, Cert of validity, Radio licence, Insurance etc etc. The group had a good knowledge of what a UK permit machine should have and asked reasonable questions given the order the papers were in in the file. I have visited France many times and have never seen this approach used, but apart from a short delay in our progress it was no problem.

Rod1

[gasax]

These sort of 'ramp checks' are fairly common, I've had it happen to me twice. Both times with G-reg permit machines and as Rod says, they know what they are looking at and if someine is not in order then the impression is that things will get difficult.

They do seem to concentrate on 'foreign' registered machines - certainly the last time it was only those where the pilots were being located and the paperwork reviewed.

But none of this is about VAT much more the sort of thing that the FAA carry out in the US.

Interestingly on my last trip there seemed to be more N-reg machines which looked to be based in France. I spoke to several pilots who pointed to their Cirri or larger Cessnas - which were N-reg'd

[IO540]

As I said, if it is a G then they "cannot" (as in "French cannot") be looking for a certificate of free circ for VAT.

They must be looking for other papers. But if they are turning over homebuilts and not checking pilot licenses, they must be suspecting bogus airframes...

I would imagine extra attention would be paid to

- homebuilts
- foreign reg
- any group with a "history"

[NazgulAir]

It's not just France. At the first Light Aircraft Fly-in at Texel, The Netherlands, a team of Customs officials came to check all visiting N-reg aircraft for documents proving that they have been imported and duties and VAT were paid.

[IO540]

What happened to those who didn't have the cert of free circ?

[NazgulAir]

Not a single violation was found. Fortunately, it did not disrupt the good cheer of the event.

[IO540]

Not a single violation was found

Are you saying that every N-reg had a Certificate of free circulation for VAT ?

[mm_flynn]

I suspect most/all N-regs have a import docs or a certificate of free circulation. It is only a few years ago the UK stopped issuing these and only last year that you couldn't get reimported for 0 VAT in Denmark. Certainly when I was looking for an aircraft one of the key features was either a vat certificate, CoFC or the necessary paperwork and history to have one issued (which was possible at the time)

[irish seaplane]

I suspect most/all N-regs have a import docs or a certificate of free circulation. It is only a few years ago the UK stopped issuing these and only last year that you couldn't get reimported for 0 VAT in Denmark

mmmm and there are still a number of Full Time DAR's going doing fresh N Reg registrations all over Europe. These A/C are most likely without VAT paperwork as far as I can see, as its rarely something owners have from each private sale to private sale. The "Letter of Free Circulation" is closed off quite a while, and its not realistic to assume most people who opt out of the EASA system and onto the NReg (typical cost £3k) were going to go to denmark and pay up the £3-5K for a piece of paper. Admittedly if you owned a very high end tourer you might justify that additional cost, but right now there is still a steady stream of A/C hitting the N Reg in europe. Over here in Ireland there are 4 new ones on stream that I'm helping with. Its simply not realistic for a private owner in these times to maintain an aircraft in the controlled environment in these Irish shores. Most ARC renewals for bog standard 172 are being priced at 2100-2250 Euro and ending up between 8000-10000 euro out the door. One plane jane 172 most recently wound up with a 36,000 euro annual for various items including an engine refit (just the fitting...not the o/h)

Faced with this unbearable costs, its little wonder owners would sooner opt for the Nreg and put the jollies to Europe on hold untill the VAT situation clears up. Clive Chapman at Forest Aviation is working towards a solution. I've just taken the bull by the balls and written polietely to HMRC and stated my case based on the dates and the A/C being in the UK/EU since 1977 and now on the N reg - and asked if they can demonstrate a VAT liability. Its a chance but I'm not living in the UK so it'll be interesting to see what they come back with!

Irish

[IO540]

It is easy enough to demonstrate no VAT is due (especially, I think, with the very old 1980s and older imports) but that is not the same thing as having the CofFC which the French (and others) are allegedly looking for.

And under EU law, the Customs must deliver a CofFC upon request. The UK Customs have been acting illegally for the last few years.

I know for a fact, from the number of people who contact me, that a lot of people out there haven't got that magic paper.

IMHO, most pilots who don't read the forums (which must be most pilots) won't even know about this.

It may be the Frog Customs are happy with a purchase invoice... who knows?

[A and C]

Quote:-

Most ARC renewals for bog standard 172 are being priced at 2100-2250 Euro and ending up between 8000-10000 euro out the door. One plane jane 172 most recently wound up with a 36,000 euro annual for various items including an engine refit (just the fitting...not the o/h)

I find the prices that you are quoting rather interesting to say the least, it looks on the face of things you are being overcharged however without looking at the individual aircraft and work done it would be wrong to say that this is the case.

I know that we would not be charging that sort of money for an ARC renewal, may be you should look at getting the annual checks done in the UK, there is nothing to stop this with EASA part M.

[englishal]

€36,000 sounds awfully steep !!

Regarding the CofFC it is a nightmare. We are tackling this problem at the moment. Our aeroplane is G reg and has been in FC since 1979. It crashed in 2009 and was being sold as a pile of scrap (not subject to VAT) and we bought it and decided to rebuild it. All of our rebuild costs attract VAT - Engine zero time, new prop, repairs, etc...so effectively VAT has been paid on all of it apart from the initial £6000 which we paid for the "scrap" - VAT is zero rated on scrap so effectively ALL vat has been paid.

So how the heck do we get a letter from HMRC stating the aeroplane is in FC? It clearly was before the accident and since the accident additional VAT to the tune of about £8500 has been paid to bring it from scrap to an aeroplane. Customs are not interested and you get thrust from left to right with no one giving a proper answer. We asked:

XXXXX and I purchased G-XXXX, a Rockwell Commander Serial number 1XXXX, in October 2009. The aircraft was subject to a complete write off after a landing accident. We bought the airplane as salvage for £XXXX from Global Aerospace, who disposed of the aircraft remains on behalf of the previous insurers. Prior to the total loss G-XXXX was based in the UK / EU, since 25.07.1980, and was considered to be in free circulation within the EU.

We have since been rebuilding and upgrading the airplane to an airworthy state, utilizing UK based maintenance and repair facilities. VAT is payable on all the new parts, labour, and services involved in the repair, as appropriate.

We understand that VAT was not payable on purchasing salvage. As such we would be grateful if you would confirm that, once the airplane has been rebuilt to an airworthy condition, that there is no further VAT liability on the airplane and that she will remain in free circulation within the EU.

I have enclosed the original purchase invoice from Global Aerospace, and VAT invoices with details of VAT paid on the repair to date. I also enclose the complete registration history of G-XXXX since 1980.

Their response was: -

"Our public notice 700/6 advises HMRC will not give rulings where we believe that the point has been covered by our Notices or other published guidance; instead we will refer you to the relevant publication and indicate where you will find the answer.

I believe there is sufficient public guidance which covers your enquiry. I will address the issues you raise with reference to our Public Notice 744C (Ships, Aircraft and associated services

3.3 What is a "qualifying aircraft"?
A "qualifying aircraft" is legally defined as any aircraft of a weight of not less than 8,000kg which is neither designed nor adapted for use for recreation or pleasure.

The weight is its authorised maximum take-off weight. This is specified:

■for civil aircraft - in the certificate of airworthiness in force for the aircraft; and
■for military aircraft – in the released documents issued by the Ministry of Defence.
If there is no certificate or release documents, you should contact our National Advice Service for advice.


In summary as long as you are satisfied that you are making the supply of a qualifying aircraft then you will normally zero rate that supply. However if you believe that that supply does not meet the definition as a qualifying aircraft then you should normally charge VAT at the standard rate."

I simply asked them if there was any VAT to pay ... :ugh::ugh::ugh:

[IO540]

This has just passed me by, which may be of interest to some:

An Alternative Procedure

Owners of an N-reg which used to be on G-reg, or who want to transfer their aircraft from G-Reg to N-Reg, should do the following:

Write to the National Coordination Unit ([email protected]) or write to general GA matters department at HMRC ([email protected]). Both departments do reply to emails. One owner who did this received the following reply:

"Free Circulation Certificates have not been issued by this Department for a number of years as they have no legal standing within the EU. There was a ruling made that any aircraft that was registered pre 1985 and was in continuous EU ownership up to 1/1/1993 would be considered as VAT paid. If you are still worried I would suggest you take a printout of the registration history from G-INFO which confirms the aircraft's age and ownerships over that period of time."

The text above is from one of the email replies received from the GA Intelligence Officer, Border Force National Intelligence, Air Intelligence & National Operations. The aircraft owner should carry a copy of the email trail with the UK Border Agency and a print out of G-INFO which proves ownership from first day on which the aircraft left the G-Reg.

For aircraft's where this rule is not applicable no information about what needs to be done could be obtained.

For "vintage" aircraft like e.g. a Cessna 310 it seems to be very easy to prove VAT paid status if it was registered in the EU before 1985 and in EU ownership until 1/1/1993.

Regarding the need to do a full import when an aircraft is moved onto the N-Reg, the reply was:

"There is no problem with re-registering the aircraft on to the US register - the same conditions would apply regarding dates and ownership, so as long as you (or an EU resident) remain the beneficial owner, there would be no requirement to 'import ' the aircraft."

[englishal]

IO,

I tried this procedure on 30th July this year, and so far have had the usual response....nothing. No reply, nada.....

In my experience these government departments who SHOULD help clarify matters like this, when they receive a request which is too much hassle for them or it is too out of the box for them, just don't reply.

It p*sses me off as for the past 6 months I have been writing to various HMRC departments, and so far have had zero response with anything useful. The VAT department completely got the wrong end of the stick and assumed I was "dealing" aircraft and so clearly didn't read the letter.

No one seems interested, and now I have run out of ideas. I'm going to forward the email to them again and see if I get a response but if not then I assume that I have done everything reasonably possible to confirm the VAT status and Free Circulation of our aircraft and IF it ever came to court I'd produce these documents as evidence that we had tried, and failed, to get advice from HMRC.....

We are pre-1985 and meet the requirements that you kindly posted.

[IO540]

Evidently 1985 was the date of the "amnesty" I referred to earlier.

The trick (if it is a trick) would be proving this to French or German Customs.

Can anybody find some documents on the original UK Customs & Excise ruling on this? Even I can remember reading about it in the papers at the time, and that was a long time before I got into flying.

However, I wonder whether the French etc are obliged to consider a UK Customs VAT amnesty? Surely they must do so under the VAT treaty; that is how certificates of free circulation worked. All EU Customs people hated the Danish ones (obtained as they were over 1 day of a Danish lawyer owning the plane, in return for a nice 4 figure sum ;) ) but, according to a presentation to went to a few years ago by an aviation lawyer, they had no option but to honour them.

[englishal]

Does anyone know of any "older" aeroplanes - i.e. pre-1985 ever getting stopped in this way? We hear stories of TBMs etc., being stopped but perhaps older aeroplanes just don't get stopped?

Ta

[IO540]

My TBM story is apparently true; not recent though as it happened 7-8 years ago.