VAT free flying training
Thread Starter
Joined: Jun 2001
Posts: 1,014
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From: England
VAT free flying training
I was talking to someone at an airfield 'somewhere in england' who do not charge VAT on their flying training and hire of aircraft.
They said the VAT man suggested to them a way to do it by registering themselves as a sport and leisure facility. ( I assume they were not under the VAT threshold).
Is everyone else missing a trick here? Are we all paying VAT unnecessarily?
Anyone know if this is a valid way to operate?
They said the VAT man suggested to them a way to do it by registering themselves as a sport and leisure facility. ( I assume they were not under the VAT threshold).
Is everyone else missing a trick here? Are we all paying VAT unnecessarily?
Anyone know if this is a valid way to operate?
Joined: Aug 2001
Posts: 19
Likes: 0
From: Bradford, West Yorks
The idea of VAT free flight training is obviously very appealing. It is however not quite as straightforward as it first appears for a number of reasons.
I am not an expert on these matters but the basic plan is :
A flight training organisation sets up as a charitable non profit making organisation. As such then any sales it makes are not subject to VAT (under current legislation. the difficulty is that any business has of course got to make a profit and the difficulty is persuading the authorities that all the costs normally associated with flight training should be borne by the charity. If this is not achieved then the "parent organisation" must stand the costs without access to any of the revenue. If at a later date the customs and excise were to deterine that the scheme dod not meet the requirements of the legislation then VAT would be deemed payable on the revenue and of course the flight training organisation would now find itself in a great deal of trouble financially.
I can see that there is possibly some scope for member owned organisations such as LAC to go down this route, but it is fraught with danger for most FTO's to entertain this route.
Can I suggest that a better route would be for everybody to write to their MP to ask for VAT relief to be granted on commercial flight training to bring us to a level playing field with our colleagues in Europe and to replace the relief that was given by the NVQ scheme.
Malcolm Dean
Head of Training
Multiflight
I am not an expert on these matters but the basic plan is :
A flight training organisation sets up as a charitable non profit making organisation. As such then any sales it makes are not subject to VAT (under current legislation. the difficulty is that any business has of course got to make a profit and the difficulty is persuading the authorities that all the costs normally associated with flight training should be borne by the charity. If this is not achieved then the "parent organisation" must stand the costs without access to any of the revenue. If at a later date the customs and excise were to deterine that the scheme dod not meet the requirements of the legislation then VAT would be deemed payable on the revenue and of course the flight training organisation would now find itself in a great deal of trouble financially.
I can see that there is possibly some scope for member owned organisations such as LAC to go down this route, but it is fraught with danger for most FTO's to entertain this route.
Can I suggest that a better route would be for everybody to write to their MP to ask for VAT relief to be granted on commercial flight training to bring us to a level playing field with our colleagues in Europe and to replace the relief that was given by the NVQ scheme.
Malcolm Dean
Head of Training
Multiflight
Thread Starter
Joined: Jun 2001
Posts: 1,014
Likes: 1
From: England
Is that how LAC have done it? Are they a charity.
As to the subject of making a profit, does this matter, since I have been assured by every owner of an aeroclub that it is not possible to make a profit out of flying
As to the subject of making a profit, does this matter, since I have been assured by every owner of an aeroclub that it is not possible to make a profit out of flying
Joined: Jul 1999
Posts: 135
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From: Nottingham
So long as LAC remains a Registered Facility, offering only the PPL and associated ratings, then there is justification for it's being termed a 'Sports and Leisure Facility'. However, such an option is not available to Flight Training Organisations such as Malcolm's, approved by the CAA to provide courses of training leading to professional qualifications. Thanks to JAR-FCL, of course, everything from the MEP upwards is considered to be a professional qualification, even if it is intended to be attached to a PPL.
The relief that was given by the NVQ scheme was withdrawn as a direct result of the selfishness of the vast majority of those who registered for the scheme. Having given millions of pounds in relief, the Inland Revenue discovered that not one ab-initio registree had completed the NVQ and so, not surprisingly, decided that VTR was being fraudulently claimed and withdrew it. The QCA, having been made to look foolish by self-seeking trainee pilots, then closed down the NVQ altogether. Having been bitten so badly, neither organisation is likely to consider a similar scheme in the future.
VAT relief for flight training is similarly unlikely. In 1999 The House of Commons Select Committee on Environment, Transport and Regional Affairs, in its fourteenth report stated:
"We recommend that the Government should take steps to ensure that access to training and practice for General Aviation pilots is not unduly limited, either by cost or by planning constraints. We believe that all pilots should be given incentives to undergo training and, accordingly, recommend that VAT should not be charged for appropriate training courses. We recommend that the Safety Regulation Group should re-examine the regulatory burden it places on General Aviation pilots and others, to ensure that the cost of meeting regulations does not inhibit pilots from keeping in current practice."
The government rejected the recommendation and, given the glut of highly qualified pilots now coming on to the market, is unlikely to see any reason to change its mind in the near future.
[ 09 October 2001: Message edited by: rolling circle ]
The relief that was given by the NVQ scheme was withdrawn as a direct result of the selfishness of the vast majority of those who registered for the scheme. Having given millions of pounds in relief, the Inland Revenue discovered that not one ab-initio registree had completed the NVQ and so, not surprisingly, decided that VTR was being fraudulently claimed and withdrew it. The QCA, having been made to look foolish by self-seeking trainee pilots, then closed down the NVQ altogether. Having been bitten so badly, neither organisation is likely to consider a similar scheme in the future.
VAT relief for flight training is similarly unlikely. In 1999 The House of Commons Select Committee on Environment, Transport and Regional Affairs, in its fourteenth report stated:
"We recommend that the Government should take steps to ensure that access to training and practice for General Aviation pilots is not unduly limited, either by cost or by planning constraints. We believe that all pilots should be given incentives to undergo training and, accordingly, recommend that VAT should not be charged for appropriate training courses. We recommend that the Safety Regulation Group should re-examine the regulatory burden it places on General Aviation pilots and others, to ensure that the cost of meeting regulations does not inhibit pilots from keeping in current practice."
The government rejected the recommendation and, given the glut of highly qualified pilots now coming on to the market, is unlikely to see any reason to change its mind in the near future.
[ 09 October 2001: Message edited by: rolling circle ]
Joined: Mar 2000
Posts: 1,450
Likes: 5
From: UK
RC,
Interesting post but as one of the selfish majority I must take issue. Whilst the tax relief was welcome the NVQ itself was utterly pointless. The scheme was misguided. If the NVQ was worth having people would have done it for its own value. Why wasn't training for a professional qual (CPL/ATPL) good enough in its own right to qualify for tax relief? Did the Government really need the relatively small amounts of revenue generated by taxing flying training? To call those who were attempting to train as commercial pilots as efficiently as possible "selfish" is unnecessary and divisive. It was still a good post though.
Interesting post but as one of the selfish majority I must take issue. Whilst the tax relief was welcome the NVQ itself was utterly pointless. The scheme was misguided. If the NVQ was worth having people would have done it for its own value. Why wasn't training for a professional qual (CPL/ATPL) good enough in its own right to qualify for tax relief? Did the Government really need the relatively small amounts of revenue generated by taxing flying training? To call those who were attempting to train as commercial pilots as efficiently as possible "selfish" is unnecessary and divisive. It was still a good post though.
