Can I use a Ltd company to get VAT back?

[Unusual Attitude]

Here's an interesting question.

My girlfriend currently runs a VAT registered Ltd company which I am an employee of working in the corporate health promotion sector.

If therefore the company wished to put me through, say a CPL/IR, would they then be able to claim the VAT back on this if we could prove a benefit to the business??

The benefits could be:-

1. To give me a better understanding of aircraft related Travel Health issues in order to provide presentations & advice on such.

2. As my girlfriend has to travel on a regular basis up and down the country the training would enable my to fly her places to increase flexibility and better utilise her time, in effect a company pilot.

3.... some other reasons I've not thought of yet but I'm sure I could come up with !!

Anyone got any experience of trying this ??, it might be worth it considering the £4000 of VAT that could be claimed back.

I've already passed all 14 ATPL's and have all the hours I need so there's no issue there.

Regards

UA

[Quidditch Captain]

I looked into this some time ago.

The outgoings on which you reclaim VAT must be directly related to the incoming revenue of the company, according to the regulations. So you would have to be able to demonstrate that at least part of the company's business was directly related to aviation. Good luck, but I think you'd be creating more problems that you'd solve!

I was informed that HM Customs and Excise (and the Inland Revenue!) are aware of the high costs of aviation training and other activities so small companies having expenditure in these areas tend to get a higher amount of scrutiny, to ensure that the situation is genuine and not just a means of reducing unrelated training costs.

[Polar_stereographic]

My advice is - don't do it.

As has been mentioned already, the authorities you will be surprised to hear don't like people flying and will seek any way they can to make sure that it costs you the full whack.

They can make life really dificult in all respects.

My advice is - don't do it.

PS

btw, they are not nice people to deal with either.

[Sensible]

I have much experience of dealing with HM Customs and they don't have much of a sense of fun when it comes to obvious "try ons"

Consider this: Is the company entirely squeaky clean in all of it's business transactions? The Customs boys sure can make life tricky if they are minded!! The problem is, once they see that somebody is not playing straight, they tend to very closely look at every transaction. I have never had a VAT inspection without them finding something out of order in spite of my most honest endeavours!

Chickens tend to come home to roost in one form or another. HM Customs chickens have stings in their tails too!

[Lawyerboy]

Also, even if you get the VAT position squared away to your satisfaction (and, more importantly, that of Customs & Excise) don't forget that there are other taxes to think about; ie, if you, say, get the use of an a/c on company business, might you be taxed on its value as a benefit in kind? See the discussions on this in the Private Flying forum a week or so ago.

Be very very careful with this.

[P.Pilcher]

I can only relate my own personal experience when faced with a similar problem when I trained for my I.R.with SFT in the good old days of about 1980, but the rules may have changed since then so beware! I was working in education full time as a teacher, but prior to this I had been a sole trader in the electronics industry and needed to be VAT registered. I continued this work on a part time basis while teaching and therefore continued to be VAT registered. With the whack of VAT which I would have to pay for the I.R. the same thoughts occurred to me, so I telephoned the VAT office to find out if I could claim it back. I received similar answers to those you have already obtained i.e. the training you obtain must be of benefit to your business. I was also advised that because my turnover was small the input tax claim would distort the figures and trigger an inspection, but provided I assured the inspector that the new qualification would enable me to provide further aviation services, it would be accepted. I therefore made my letterhead and invoices carry the words "electronic and aviation services" and claimed back the tax. The inspector duly arrived and eventually decided that as she could find no invoices for "aviation services" the claim was probably not allowable. This was confirmed by her bosses after a while in writing. Shortly after this an acquaintance did his best to scrounge a flight off me as he wanted to do some "special" aerial photography. I gave him loads of advice, and assured him that I would give him the best deal possible (but we all know what A.O.C. costs are don't we so he wasn't interested) As I had spent so long giving this guy advice I felt that I was entitled to charge him for it so drew up an invoice for about £10, and applied V.A.T. Of course he never paid it, but I declared the V.A.T and paid that. I then pointed this out to the VAT office and my claim for about £350 of VAT spent on my I.R. was accepted.

Best of luck!

[Hyph]

I'm not going to give any advice on this one (it's a minefield), but I did want to share a couple of views on the subject...

I used to run a small company which was reasonably successful but began to face very tough competition from several larger firms. Eventually I gave it up, but that's another story...

Anyway, at the time I considered doing a CPL/IR and having the company pay for it. The reasoning was that I was spending ridiculously large amounts of time in the car and that by using a light aircraft it would allow me to travel further in less time, resulting in more work done and (hopefully) higher revenue. It would also have allowed some diversification in employment.

Before taking the bold step of going ahead and doing it I ran the scenario past my accountant. He had a good look through a basic 'business plan' which projected the return on investment for the company. After some consideration he said that I'd almost certainly be hit for benefit-in-kind on the training because it would make me personally 'better off' in terms of marketable skills. He also reckoned that the HM C&E would not be happy about the me reclaiming the VAT.

I wasn't happy with this as I felt that I was being stung purely because someone else might decide that I was 'trying it on'. I argued the point with my accountant and eventually he said that I could try it if I liked and that he'd do battle with the IR and C&E as necessary - however he did warn me that the costs of doing battle would probably exceed the savings I would have made in the first place, so faced with that, I never did it.

However... since that time I have worked with several companies and I have seen some amazing 'expense' claims being authorised, on which not only VAT is reclaimed but the individual concerned is not hit for B-I-K. I've seen people sent on training that was unrelated to their business.

It seems that the tax collectors are out to nail the small guy, even if his claim is genuine. They use their powers to intimidate at every opportunity... the dreaded VAT inspection - and as Sensible said, they *always* find something, no matter how clean you think you are.

If I was in the position to do it again, I'd probably go for it and argue it out if necessary. As long as you are 100% within the rules you ought to be allowed do it, but things just don't seem to work that way.

Ok, rant over.

Ivan.

[Ludwig]

OK, hot of the press. My VAT Inspector chappie has now just left the building having spend all day knit picking. One topic that did raise his eyebrows was.......

VAT on my flying costs.


My business is nothing to do with aviation, save that a couple of my clients own aircraft. We are a ltd company and registered for VAT because we have to be rather than as some sort of voluntary registration scam.

The company pay for all my flying,both in my own a/c and when I hire one from the local school It goes on the P11D as a benefit in kind and I pay income tax on it. We claim back the VAT. All the invoices for everything are in the company name.

He says we cannot claim the vat as it is personal expedditure as the business is not in aviation. I told him it was a business expense as it forms part of my remuneration package.

We fight. Results will be posted here if anyone is interested!

[jonathang]

I wouldn't try it these are the same people who send u out a tax request for 19p. Less than the cost of the postage.

[Unusual Attitude]

Oh well, looks like that's another cunning masterplan down the toilet courtesy of the VAT man !

Thanks all for your advice, looks like you could have saved me from a very nasty time with the government beancounters.

Back to the drawing board......

Regards

UA

[SFI145]

Is it true that VAT is not payable on flight training in most EU countries as it is considered to be education?
Also I believe that London Guildhall students do not pay VAT because LGU has university status.