Cost sharing-legals

[modelman]

I have a business appt soon and was planning to drive there with my boss.
He suggested that he would like me to fly us there-not for any time advantage,just thought it would be fun.(obviously hasn't seen my flying!)
Seemed ok for us to each pay 50% (he would prob claim his back on expenses but I was happy to pay for my half as flying on a 'work' day suits me fine.
Now the chairman wants to come too.
Will I still be legal to only pay 1/3 as technically the company will be paying all the rest?I am not a director-just a regular employee.

I'm not looking to save money particularly but wanted a fair but more importantly legal arrangement.
I have a PPL only (no CPL etc)

Thanks for any advice
MM

[maxdrypower]

This is one of those totally grey areas that get discussed every now and again at length with a resolution never really coming to the fore. Everyone has a different take and interpretation on this . At the end of the day if you charging people for a flight for whatever purpose then that is hire or reward . Howver if you are taking two people who are both paying a representative share equal to yours then its legal. However if the company stumped up the cash for all three of you to fly then technically it isnt . I would suggest you are fine doing what your doing , I doubt the CAA will come crashing through your door . I like a lot of others take friends flying so long as we each pay our share it deosnt matter why we fly so long as we dont earn money from it . You will probably get a hundred more responses each with a subtley different take . The main argument normally centres around the , "spare seats" thread . I would say you are okay

[J.A.F.O.]

I'd say it was okay for you to claim back your third, too as it's just mileage you'd be claiming anyway and as long as you're not required to fly - just doing it as an alternative method of getting there if it's possible on the day - then it's not a problem.

I think.

[Norfolk Newbie]

I'd say it was okay for you to claim back your third, too as it's just mileage you'd be claiming anyway and as long as you're not required to fly - just doing it as an alternative method of getting there if it's possible on the day - then it's not a problem.

JAFO, this is my understanding also.

In the same way that you could reclaim a rail ticket, a 1st class flight etc. Particularly as you're "just a regular employee".

[pulse1]

I arranged to do something similar in my company but it was eventually ruled out because it was deemed unacceptable for three critical (to the business, not of my flying) people to fly together in a private aircraft. I even got told off for taking a colleague up for a bimble as, if we had been killed it would have been a major setback for the business. We often flew together on airliners though.

It was also acceptable for us to fly in a Bonanza with a friend of mine who has an ATPL. That was one of the most enjoyable business trips I ever did. I really enjoyed answering the taxidriver's question, "What time's your flight?" "When we get there." I said. Probably meant that he put the price up.

[Legalapproach]

Simple answer - yes, and you can reclaim your costs just as you could reclaim the mileage if you were using your private car. In fact you don't need to worry about the cost sharing aspect if in effect your company is re-imbursing you for the cost of the flight as if you had been making it on your own/in your private vehicle.
Legal gobbldeygook follows
Costs sharing Article 160
A flight will be a private flight if the valuable consideration falls within 157(3)(c), or relates to a group owned aircraft under 162 (3) or is a contribution to the direct costs of the flight otherwise payable by the pilot in command. The further criteria that apply are that no more than 4 persons (including the pilot) are carried, that the proportion that the contribution bears to the direct operating costs does not exceed the proportion which the number of persons carried on the flight (excluding the pilot) bears to the number of persons carried (including the pilot), i.e. where 3 people are on the flight two thirds and where there are 4, three-quarters. Further, no information can be published or advertised prior to the flight except in the case of an aircraft operated by a flying club in which case there can be advertising wholly within the premises of the flying club and all of those carried must be over 18 and club members. The operator of the aircraft being flown cannot employ the pilot of such a flight directly or indirectly. In respect of a payment made or promised for aircraft hire under 157(3)(c) the airworthiness requirements of part 3 to the ANO will apply as for a public transport flight.
Recovery of direct costs Article 161
This allows an aircraft to be used for work purposes in the same way that a mileage allowance in a car would be repayable as expenses. Article 161 provides that a flight will be a private flight if the valuable consideration is made other than under article 157(3)(c) and 162(3) and is payment in whole or in part of the direct costs of the flight otherwise payable by the pilot in command made by his employer or by or on behalf of a company of which the pilot is a director provided that neither the pilot in command nor any other person who is carried is legally obliged whether under contract or otherwise to be carried. Thus you can opt to use a light aircraft for business but your employer cannot force you to.
As with the other exemptions, payment in respect of aircraft hire for business purposes will not exempt the aircraft from complying with the public transport requirements of the airworthiness part to the ANO. Thus a company owned aircraft or a private aircraft can be operated on a private C of A but an aircraft hired for business purposes will require a public transport C of A.

[sternone]

Doesn't the company needs any type of document proofing the costs they have made ? Since you own no business you cannot deliver that correctly ?

Also for the company that would not be VAT detuctible ?

[IO540]

The problem here is that the man probably (he doesn't actually say that) owns the plane already.

If he doesn't own the plane at all, then the company could rent one in, free issue it to the chap, pay for everything, and provided he is not contractually required to fly then he could just fly the whole lot of them to the meeting. Zero cost to him.

If he already owns the plane personally, we have the grey area. I think it's right that in his cost recovery he's limited to the PPL cost sharing formula. This in turn leads us to the old chestnut of what comprises direct costs, which the CAA has quite deliberately never defined openly.

If he already owns the plane either wholly or partly but via a limited company, then that company can rent the plane to the man's employer and IMHO we are back to the first scenario.

[modelman]

Thanks

Thanks for all your responses-much appreciated

IO540-Sadly,I do not have my own plane ( or is it!!!) but I like your way of putting it.i.e.The company rents the plane and I fly it FOC-seems ideal,thanks.

MM

[Lucy Lastic]

>>>>If he doesn't own the plane at all, then the company could rent one in, free issue it to the chap, pay for everything, and provided he is not contractually required to fly then he could just fly the whole lot of them to the meeting. Zero cost to him.<<<<<

I'm not sure that is strictly within the meaning of the law. The pilot is still receiving a "valuable consideration" of free flying.

[bookworm]

I'm not sure that is strictly within the meaning of the law. The pilot is still receiving a "valuable consideration" of free flying.

It is precisely what the law intends to permit. If you interpret the "free flying" thing as you do, you could never take a passenger who enjoyed flying for a ride as a private flight, because you would be giving them valuable consideration in the form of "free flying as a passenger" which they would otherwise have had to have paid for. That would make the flight aerial work.

There is no intention in the law that the flight itself is valuable consideration. Flights always provide some value to someone. It's valuable consideration in exchange for the flight that is relevant. If, for example, modelman's boss agreed not only to pay for the flight but to buy him a substantial gift as a thank-you for doing the flying, then you would be getting into illegal territory.

[Lucy Lastic]

Thanks for that. I have to say that I'd never assumed that was the case.

At my club, when the subject comes up for discussion, it is assumed that the pilot must pay a proportion of the cost of the flight to stay legal. Free flying, I was told, is a no-no.

[bookworm]

At my club, when the subject comes up for discussion, it is assumed that the pilot must pay a proportion of the cost of the flight to stay legal. Free flying, I was told, is a no-no.

That's a reasonable way of describing the cost-sharing exemption, so I'm not surprised it's simplified in that way in the club; but as we've discussed, other exemptions exist, such as that allowing the pilot's employer to pay all the direct costs.;

[BackPacker]

At my club, when the subject comes up for discussion, it is assumed that the pilot must pay a proportion of the cost of the flight to stay legal. Free flying, I was told, is a no-no.

The assumption is generally correct. You can't go wrong by working under that assumption. However, the ANO, in article 160 and the surrounding articles, defines a number of specific exceptions. And this just happens to be one of them. See Legalapproaches post.

Short version is that the company can reimburse your direct flying costs provided that it is not aerial work (in other words: there have to be other means of reaching the destination, for instance making the journey by car or commercial air) and your employer cannot force anyone to attend the flight.

As for what "direct costs" are, well, it's a minefield, as IO540 pointed out. If you rent from a club, just submit the clubs bill plus any landing fee bills. But if it's your personal aircraft, you've got to find a way, if you want to, to include things like financing, depreciation, annuals etc into the "direct" costs of flying. For instance by going through an intermediairy company.

[rateone]

I have used my (group owned) a/c for a business trip and the company refunded the cost. I flew it solo and I did have the choice of taking a scheduled flight, driving or taking the train. It was significantly quicker than the car or the train and was only about 20 mins slower than the scheduled flight and about £30 cheaper. I submitted the claim as normal with a comparison to the airline ticket and it was paid.

I even got told off for taking a colleague up for a bimble as, if we had been killed it would have been a major setback for the business.

Pulse 1, I think your company's response is a little over the top. What you and your friends choose to do on your own time is none of the company's business (unless perhaps it is illegal). The fact that the company has no critical cover is an issue for them, not you. I hope you are extracting maximum value

[maxdrypower]

You see what I mean , minefield , just do it if you get grassed up which is in reality the only way the CAA are even gonna raise an eyebrow then argue the case (which in their case would be V thin ) and as they havent defined it well enough , nothing would happen anyway

[topcat450]

Without wanting to thread drift too far...

If, hypothetically speaking MM, did have a CPL, how would this change things?

Would MM be able to charge his company for his time flying them.... or would that then imply it was a chartered a/c and would need an AOC?

[IO540]

AIUI, the pilot having a CPL modifies the scenario under discussion only in that he can now be contractually required to fly, in other words he can be a paid company pilot.

And this is true for both a JAA CPL and an FAA CPL.

This is widely relied on, in both G-reg and N-reg corporate jet operations which employ both CPL/IR and ATPL pilots.

Having a CPL doesn't AIUI modify the [in]ability to conduct "aerial work", practically all of which requires the operator to have an AOC. This is incidentally also true in FAA land, although they allow a bit more latitude. The CAA requires an AOC for just about everything of relevance.

A CPL allows one or two other trivial things; I vaguely recall it enhances the radius with charity flights, or something like that.......

But if it's your personal aircraft, you've got to find a way, if you want to, to include things like financing, depreciation, annuals etc into the "direct" costs of flying. For instance by going through an intermediairy company

I don't believe you need to work through another company to do this, although doing so certainly clarifies the matter. IMV "direct costs" does include

fuel
landing fees
engine fund
prop fund
any hours-based maintenance
depreciation

but does not include

annual maintenance
finance costs (other than a possible airborne time related element)

If you work the supply of the plane through a company then everything can be included, and this is exactly what happens when you rent a plane from a school - they are billing you for the lot, plus a profit margin.

I wrote to the CAA about this some years ago, because I was operating a plane through a limited company, of which I was also a director, and I was concerned that I could potentially bust the PPL cost sharing rule, by charging 3 passengers 75% of the direct costs while also drawing a salary from the company. Their legal dept said it was OK - unsuprisingly, otherwise any employee of a flying school would not be able to use the PPL cost sharing scheme to the full.

[DFC]

The answer is simple and clearly explained in the following CAA document;

http://www.caa.co.uk/docs/122/summar..._transport.pdf

Read exception number 4.

Regards,

DFC

PS. Having a CPL would not make any difference.