'Business trips'

[VMC-on-top]

So, because I have a sole trader business, I can just declare it as "travel" and no-one will question it?

[BackPacker]

What IO is probably (I'm not a mind reader) suggesting is two things:

1. Declaring the costs of the flight and then getting reimbursed might (note: might) be beyond the limit that's set by the tax authorities as a reasonable claim per mile. Any excess above that is taxed. At least, that would be the case in the Netherlands.

2. According to the ANO article you can only claim the direct costs of the flight. Not the annual costs. But in a rental scenario, annual costs (insurance, hangarage) are all part of the rental costs. I think IO claimed earlier somewhere on here that nobody has established whether this part of the rental costs can be claimed or not. If yes, then the law is unfair to owners of private planes and if no, how do you determine what % of the rental costs are annual costs, and what % is variable?

Both of these are most likely solved if the company picks up the bill for the rental, and let you fly the plane. Subject to the other limitations in the ANO article of course.

[Torque Tonight]

So, the example I mentioned. Pull up a sandbag and I'll swing the lantern.

About 18 months ago I found myself in the flight planning room at an airfield near the English/Scottish border preparing to go flying. The met picture was pretty much: England - 'long delirious burning blue' ie Good; Scotland - 'harry Sh1ters' ie Bad. Into the room came a party of three: one pilot and two passengers, all looking somewhat agitated. The pilot started scrabbling around with charts and flight guides while the passengers had a fairly tense conversation in the corner of the room.

After a short time the pilot started asking me questions and seeking my opinions. It turned out that they were all friends. The pair jointly owned a business and the third was a newly qualified PPL. They were on their way from an airfield near London, where they hired a club aircraft, and needed to get to a small strip in the Scottish highlands for a business meeting. When I say 'needed', it turned out that they really NEEDED to be there. Apparently the business was in trouble but with an offer on the table. They were meeting to sign a deal with a Scottish company that would have given their own company a bright future. If they didn't get there, the deadline would expire, their business would go under probably taking their houses and marriages with it. Let's just say there were some commercial pressures presenting themselves. Unfortunately the pilot, having reached the border area, didn't like the look of the weather and ducked into this airfield to consider his options. The passengers had not even contemplated the possibility of their friend not being able to get them to the meeting and the pilot, when he agreed to take them, hadn't known that it was a matter of business life or death. The atmosphere was turning toxic.

Looking closely at all the flight planning data available it was abundantly clear that this new PPL could not possibly continue with the flight, safely or legally, and I told him as much. However, his friends were putting considerable pressure on him to go. He was deliberating, pretty much on the point of deciding to go ahead and 'take a look'. However, partly as a result of my opinion, he reluctantly decided 'no-go' and told the passengers. That wasn't a very pleasant conversation, as you can imagine.

But then he had an idea: "Can you fly it", he asked. I was surprised, but given the seriousness of the situation, thought I should look into it as I had a wee bit more experience of flying in clag than he did. A phone call to the flying club confirmed that as I was current on that specific type of aeroplane, they were happy for me to fly and that I would be correctly insured. Having previously held a military instrument rating I was reasonably happy that I had the hand skills to have a safe stab at the task in hand but a little less happy about the paperwork and legalities. My CPL/IR paperwork was in with the CAA and would not be in my license booklet for a few more days. My PPL had a ten year old IMC rating but there and then I couldn't be certain of it's validity or privileges. I looked at the aircraft and it seemed pretty well equipped. I reckoned I could probably fly IFR, VMC on top, and then descend on an PAR or ILS at Lossie or Kinloss to overshoot VFR and continue to the strip beneath the cloud, certainly less than 1000agl (hopefully with a small margin between 'clear of cloud, in sight of surface' and Rule 5's 500'agl) - a profile well practiced in my former life, albeit lower.

It could have worked and I was sorely tempted. Meanwhile the pax were pressurising me, emphasing the importance of getting there, making frantic phonecalls to delay the deadline by an hour or so, and even hinting that there may even be some 'dividend' in it for me. It was a difficult one under the circumstances although for recreational flying there would have been no doubt whatsoever. I almost said yes. I was within a heartbeat of giving it a go but there were just too many marginal factors: high terrain, low cloud, possible icing, paperwork in the post, the old 'cost sharing conundrum', will they still say I'm insured if I write off their aircraft. I could just see the holes in the cheese falling into place, the links in the chain joining together. Knocking around in Scottish letterboxes with terrain on three sides and cloud on the other, getting tighter and tighter, was never a comfortable place to be. I briefly visualized how the AAIB would summarise my flying experience at the top of the accident report, and so with some regret, I said no. The guys looked like they had been punched in the stomachs - they were devastated and I felt bad. My erring on the side of caution had just changed the course of their lives and cost them more than I could imagine. Was I a chicken? Had I made the right choice? Should I 'man up' and get airborne? Difficult one.

It was a tough call but I am think it was the right one. Plenty of aircraft and some very experienced pilots have flown into mountainsides in crappy weather and on balance, being a disqualified company director, or an undischarged bankrupt, but alive, is probably a better option. They didn't thank me though.

[BackPacker]

It was a tough call but I am think it was the right one.

I am pretty sure it was the right one.

In fact, reading the story I would argue that not just you would have been performing that flight illegally, but the poor PPL was just as illegal. From your story I infer that he was not employed by said company and even if he were, it's clear that he was being pressurized by his employers to do that flight. Furthermore, if they would not have taken a private aircraft but gone by car, would they have taken the poor PPL with them or not?

This is well and truly into CPL/AOC territory, IMHO, and well beyond what the OP was asking about.

Nevertheless, thanks for sharing that story. As you said earlier, the OPs situation might be completely legal but once a company has seen the capabilities of a private aircraft, they may slowly sucker you into an illegal situation, and this is a fine example of that.

[IO540]

because I have a sole trader business, I can just declare it as "travel" and no-one will question it?

In any business scenario (Ltd Co or SE), if the proprietor (or any employee) "has" a plane and uses it for a clear business purpose, he can validly claim (as far as HMRC are concerned) a pro-rated piece of his total annual operating costs.

E.g. you have plane in which you did a total 100 airborne hours during 2009. The total cost (fuel, maintenance, Lycoming crankshaft changes, etc) during 2009 was £20k. Of those 25hrs were on business trips. You can claim 25/100 i.e. 25% of £20k from the business. If you don't believe this, see a competent accountant. (Claiming mileage rates instead e.g. 50p/mile are immaterial to this; they might be an agreement with the local inspector or whatever).

I cannot see how the above busts the ANO, either.

And there is no BIK attack possible because you own the plane yourself. BIK arises if the Ltd Co owns it and you have (various possible or real) access to it for personal use.

As regards "question it", the £5k travel expenses claim will appear in the accounts submitted to HMRC. They may query it; they may not even spot it. The amount claimed will obviously include car mileage, trains, airline tickets, etc. and it is all lumped together in the accounts as one figure "travelling".

There... a long reply to a one-liner

Declaring the costs of the flight and then getting reimbursed might (note: might) be beyond the limit that's set by the tax authorities as a reasonable claim per mile. Any excess above that is taxed. At least, that would be the case in the Netherlands.

Not the case here in the UK. You can claim as I describe above for a car also; it's just that HMRC have agreed to not dig around if you stick to xp/mile claims.

BTW I don't believe that in the Netherlands you can claim only say 50p/mile or some such car-like figure for a plane. That kind of thing would make planes useless for business travel. HMRC here does not require business travel to be done by the most economical means (for fairly obvious reasons) unless you do something totally ludicrous (a hot air baloon etc) and it is a basic principle of business accounting that an employee can claim back expenses incurred wholly on the business.

According to the ANO article you can only claim the direct costs of the flight. Not the annual costs.

That phrase applies to "PPL Cost Sharing" which is a different thing. The intention there, I am sure, was to prevent cost sharing a flight with 3 others and thus recovering 75% of £1000/hr for a Cessna 172 This would open the doors to illegal charter. So you can claim 75% of the "direct costs".

Both of these are most likely solved if the company picks up the bill for the rental, and let you fly the plane. Subject to the other limitations in the ANO article of course.

Indeed.

But even if the pilot owns the plane, I don't see what is illegal about recovering the pro-rated part of his total costs for the previous year as I described, from the employer. Anyway, even if it was illegal, the CAA will never find out because the claimback is done after the flight, and for Directors etc at the year-end; a long after the flight(s).

I have never heard of any indication that the CAA has ever been interested in this kind of personal expense drawback within a business. What every CAA is really interested in is "carrying paying passengers", because that needs an AOC and AOC holders (who pay heavy fees to their CAA) are constantly moaning about alleged illegal charter etc. In 2003 I had some correspondence with the UK CAA on a tangential topic and they confirmed they are not bothered.

Torque Tonight - that flight would have been illegal (no CPL) so you did the right thing. Also there would have been a few witnesses to the "situation" and they would then potentially have you over a barrel. The wx was irrelevant. Another valid factor would have been lack of currency on the type, perhaps. I would never do a serious flight (or a checkride, etc, for that matter) in a plane I was not intimately familiar with.

Otherwise, a CPL holder can legally fly a plane which is supplied to him by the passenger(s). This is how the vast majority of private jets fly around the world. You need a CPL which matches the aircraft reg, plus any type ratings etc. This is one of the very few areas where a CPL has any use without an AOC.

This isn't charter, which is when the pilot (or his employer) supplies the plane. That needs an AOC.

[Fuji Abound]

I fly a reasonable amount on business albeit almost always solo.

The people I visit know I fly and are very happy to accomodate me doing so, which means they are kind enough to collect me from the airport and accept that I usually finalise arrangements the day before.

My despatch rate is almost 100% with early morning fog being the worst problem over the years. That said I am quite timid when it comes to weather and certainly will not fly in anything. Moreover a few of the places I go regularly have no IAP.

I have a specific agreement with the Revenue which is not difficult to obtain and well worth doing if you are going to use an aircraft for business trips.

In reality it is often doubtful how much time flying saves. I reckon I have things down to quite a fine art but in reality it takes me 30 minutes to get to the airport, and I find I need to allow around 20 minutes for parking, loading the aircraft etc to get airborn. Without people meeting you at the other end and by the time you have arranged and waited for a taxi maybe there is 40 minutes or more to add to the journey, so that in reality an hour and a half can often disappear in dead time. That of course means that for any car journey of less than 100 miles the car is probably ahead of the game. If any form of ferry journey is involved the aircraft will win every time and the same is true of any short commercial flight.

Not that I do so very often but longer journeys really pay dividends. I can do south coast to Dundee in about 3:00 including getting to the airport and loading. By road it is around 9 hours.

Bristol for me was another good example which was about 3:30 by road and just over 30 minutes at 165 knots. However although the flight time is impressive again this demonstrates that with the journey time each end the time saved is substantially reduced and maybe down to 3 hours on the roundtrip.

I dont mind driving but for me (and I am sure for most of us) sitting in traffic drives me mad. I often go to Oxford. This is a typical example of a trip where flying is only marginally quicker than driving IF the car journey goes well. When I use to drive I was the one that I reckon got "stuck" in traffic on the motorway 75% of the time, so flying is still attractive.

So to sum up, it is easy to kid yourself that flying is quicker, but in the real world of getting to the airport and getting somewhere the other end this is not necessarily so. Having a relatively fast aircraft also makes a big difference on longer trips. However flying is mosre enjoyable and more relaxing so you arrive a lot fresher, particulary on longer journeys. With flexability the despatch rate is also very good although I am not so sure if you use club aircraft. When I did that for a short while I found more often than not they had gone tec. (without anyone telling you or making other arrangements), they hadnt been returned from a trip away the day before or were late back, or / and ahd not been fuelled. For me it was a complete disaster.

As to whether it makes financial sense then I suspect we all know the answer to that one.

[bookworm]

There are a few restrictions through. From memory:
- The flying only needs to be incidental to the trip. In other words, the trip would have been possible, and making sense, without (you) flying. This prevents aerial work being done under these provisions.

Just on a point of information, the issue you describe here is the "common purpose" rule, which is well established precedent under FAA rules, but has no equivalent in CAA rules. Your employer can pay for you to go and bimble aimlessly around the countryside as far as the CAA is concerned (HMRC might have a different view).

Of course if the flying missions became very frequent, there might be an issue that the PPL's remuneration was for being a pilot rather than for whatever else they did for the business. That would not be permitted.

[IO540]

The other thing is that for a PPL to fly on his company's business, the flying has (AIUI) to be incidental to the company business.

So if the company is an airline (say, charter) then that changes things. I vaguely recall reading some stuff describing a grey area where an aircraft dealership was using a PPL holder to do customer demo flights.

But there are differences between G-reg and N-reg in these departments, and also according to whose airspace it is done in.

[VMC-on-top]

ok, to slightly differ the scenario...

If I fly a colleague to a meeting, he pays half of the cost of the trip but my costs are tax deductable, so in effect I am paying less than my colleague, right? Does that mean that I can only claim the "tax deducted" portion of the flight from my colleague or is this being just too pedantic - and would anyone really care?

As to the cost of comparing a road trip to a flight, its surprising (in the above scenario for instance) how close the costs come out! Assume you have 2 pax, they pay 66% of the cost of the flight and you get 40% tax allowance on your expenses - hey, its a free flight!!

[bookworm]

The other thing is that for a PPL to fly on his company's business, the flying has (AIUI) to be incidental to the company business.

Not under UK law:

Public transport and aerial work – exceptions – recovery of direct costs
268.—(1) Subject to paragraphs (2) and (3), a flight is a private flight if the only valuable
consideration given or promised for the flight or the purpose of the flight is one or more of the following—
(a) valuable consideration specified in article 262(1) [a rental cost];
(b) in the case of an aircraft owned in accordance with article 269(2), valuable consideration
which falls within article 269(3) [a payment to a group of joint owners as one of them]; or
(c) the payment of the whole or part of the direct costs otherwise payable by the pilot in
command by or on behalf of the employer of the pilot in command, or by or on behalf of
a body corporate of which the pilot in command is a director.
(2) Neither the pilot in command nor any other person who is carried is legally obliged, whether under a contract or otherwise, to be carried on the flight.

There is no mention of "incidental". That's in FAR 61.3 (b)(1).

[Talkdownman]

I am just a simple soul getting 'orribly confused now.

I am employed by a company but not as a pilot. The company happens to be based on an aerodrome. The company happens to have business at another site at another aerodrome. The company has company vehicles and company aircraft. I happen to have a driving licence and a pilots licence. I often get asked to take employees of the company to the other site in between my normal work. This can either be achieved using a company car or, more expeditiously, a company aircraft.

What the hell is the difference apart from a huge saving in time?

If we are not doing anything wrong if I use the car how on earth can we be doing anything wrong if I use the aircraft?

[IO540]

You are not doing anything wrong, picking up a pool aircraft and flying somewhere in it.

They just cannot make you fly. If they want to make you fly then you need a CPL.

If you can freely choose to drive, fly, hitch-hike etc then you can do it on a PPL.

[Talkdownman]

Thanks! I shall take that as a laymans' guide to Article 268 !

(I have CPL by the way....but I don't have a 'commercial drivers licence'.....so presumably they can't make me drive..... )

[BackPacker]

I agree with IO that if you're doing that as a PPL, you are legal. But you are using an exception in the law to its fullest.

Once your collegues start scheduling their appointments so that being flown back and forth by you is the only viable option of meeting the schedule, or once your boss starts asking you to give a customer a sightseeing tour by air, in the hope that that might make future negotiations smoother, or once your boss starts asking you to take pictures from the air for a company brochure, you're crossing the line, IMHO. Because in those cases going by another means of transport is not going to accomplish the same goal anymore, so you can no longer argue that flying was simply more convenient than going by car.

With a CPL you have a bit more leeway but the next hurdle you would face would be whether an AOC would be required for certain operations.

[Pace]

Backpacker

Just imagine your company own a jet. they can use their jet as a business tool under private ops.

They can carry anyone in their company, they can carry goods, they can pick up people from other companies as long as its for their business use and no one is being charged.

If their jet brakes down they can rent a replacement.
If the owner is a PPL he can fly it. Someone else in the company can fly it if they hold the relevant licences and are not paid to do so.

The problem occurs if none of them fly and they have to employ a pilot to fly. then that pilot needs a CPL/ATP
Now replace the jet with a PA28 the same pricipals exist.

Pace

[Prophead]

This is very interesting. I had basically ruled this kind of thing out until I had my CPL.

If I was to drive to a site and enquire about possible work I currently claim that back as a business expense even if no work comes as a result. An area I am thinking of moving into would require me to visit airfields. I take it then I am able to fly to an airfield an try to attract new business at the airfield then claim the flying back as a legitimate expense?

This would open up more potential customers that would be reachable in a day and spare me the cost of hotels etc. As its just a sales call then I would not need to be there at a certain date/time.

This would be valuble to my company and future business, if I had an IR it would be even more valuble. Would I then be able to claim the cost of extra training through my company?

I think i will make an appointment with an accountant.

[IO540]

Indeed.

Any trip done wholly for the business is an allowable HMRC business expense - whether Ltd Co or SE.

There are various rules, practices and grey areas as to what other places you can stop at and whether you can bring a wife/GF etc with you I have never investigated these but any competent accountant should have this at his fingertips (if not, find another one immediately).

I know of pilots who manage to make every flight a "business" flight - by always making sure they drop in on some tame business contact. If you have a network around Europe, you can do this pretty well (and see Europe too ). In such a situation, the company may as well own the plane... but you then need to be careful with BIK.

Also, VAT can be reclaimed on the business trips. So, let's say your total annual 2009 cost was £20k. Of this, let's say £3k was VAT (at various rates, around the EU). If 25% of your airborne hours was flown on business trips, then your company can claim back £750 of VAT.

However, you should not claim back any VAT unless you have a VAT receipt, and ordinarily you won't get one for a lot of stuff e.g. landing fees. So, what you do is you collect together enough aviation related invoices from 2009 to make up £750 of VAT and put those through the business, doing the normal VAT reclaim on them. Document it all of course.

[Prophead]

I have a share in the aircraft I use. I take it this does not affect anything as long as I only claim the actual hours flown for business and not the monthlies etc?

[IO540]

I don't know what figure you would use as your total annual costs. I guess it would be the sum of everything you paid; monthlies and all. It would be logical.

But you need to watch it because a part of your monthlies, and indeed a part of your hourly rate, goes towards the group fund and that is not an expense; it is an asset which you (via your shareholding) are gradually accumulating.

An interesting line of argument would be the logical application of the above for a group where the fund is in an ever deepening deficit That represents an additional expense for you

The other day I heard of an interesting defence to BIK, by setting up a plane in a syndicate. Don't recall the details, unfortunately Anyway, HMRC did tell me that if every renter is a part-owner of the plane, BIK doesn't arise.

[Prophead]

So what do you think the situation would be with the extra training? If an IR would allow me to visit potential new clients could this be seen as a legitimate expense or is this really pushing it.