Can you reclaim the VAT and/or tax on training costs?

[Whirlygig]

Are you self-employed as a commercial helicopter pilot in the UK? If yes, then you can reclaim the VAT. If not, then no.

Cheers

Whirls

[Heligirl46]

VAT reclaim for IR course

Hi everyone,

I was just wondering if anyone could give me any information about how to reclaim the VAT paid on an IR course I am sitting in the UK at the moment. I am from Ireland, and some people have told me I am entitled to claim the VAT back as I am not a UK resident? I'd really appreciate any information anyone might have on this as I've gone against nothing but grey areas and brick walls so far!!!

Thanks

[HillerBee]

skippy212

NOT FUNNY

Heligirl

That would only be possible if you have a VAT number in Ireland, but I think it only applies to goods and not services supplied in the UK.

[Whirlygig]

Heligirl46, please see my post two above yours.

Cheers

Whirls

[norunway]

Vat

You most definetly can reclaim Vat on goods and services from the uk customs office out of northern Ireland if you are an Irish citizen I know because I have done it.
You start by going to an accountant and setting up as a sole trader and get them to reclaim the vat for you,the whole process takes between 8/12 months and will cost you about 500 euro's but you will receive about £6'000 stg back so is well worth the process. Forget what any body else says as they clearly havn't been through the process,if you have any questions pm me.

[staywet]

From my point of view, vat is reclaimable and previous advise is to make your self employed business description as wide as possible and if possible make vatable sales immediately. OK, we know you cant sell your flying services until you pass the cpl, but you can sell ancillary products. T shirts, caps, . In my case, I own a jewellery business and my son intends to commence his PPLh with a genuine view for it to become his livelihood as soon as hours etc permit. I consider that as ne commences as a self employed pilot, he will also rent from my shop, a display cabinet and window space. He will purchase aviation themed jewellery and these will be sold through the shop, vat will be added to the price and paid to the vat man on his quarterly returns. He will also create a web site and use ebay to sell his products whilst he trains. Therefore he will reclaim substantial amounts of vat from his training costs, but also pay smaller amounts of vat for his income. He will not get cpl flying income for about a year, although it would be good to try to qualify inside the first year, to enable a couple flying invoices to be included and maybe thereafter a couple a month.

So, Air Law Question 1. Relates to what constitutes commercial work prior to passing cpl. I know the pilot cannot sell his flying services until cpl qualified, but can take passengers once ppl qualified. Is it therefore allowed for the non fee paying passenger (family, friend etc) to take photos etc whilst the pilot does the hour building.

If so, if the photos are of familiy and friends homes, can these be sold either by the pilot or by the passenger to the family member who owns the home? Each photo may be worth £20 in a nice frame, but could they be sold for say £350 and to include a free hours air experience flight, to be flown once the cpl is obtained?

It occurs to me that this could be tantamount to cpl work and therefore not allowed,but it could be argued otherwise and therefore allows family members to 'sponsor' the costs of training. I would think 20 or 30 such photos could be sold (probably to family members who would otherwise donate or sponsor,give a Christmas present, just to support the family member) but the income would cover a huge chunk of the commercial licence fee and show the VAT man that you are trading.

Also, would you charge vat on £20 or £350 ? (remember to pay the vat back to the vat man).

[Whirlygig]

Why don't these family members just give your son £350 as a gift. No VAT, no dodgy commercial flying schemes (yes, it's dodgy and the VAT would be on the £350).

Cheers

Whirls

[Sliding Doors]

Staywet,

Rather than make assumptions try taking a look at this

http://redirectingat.com/?id=42X4874...-open-day.html

Depending on how you intend to charge/invoice for these photographs you COULD have the photographer viewed as a crew member rather than a passenger, thus making the flight a commercial trip (for which your son will need more than simply the licence).

The bigger flaw is your assumption that as a basic CPL there will be work/any work options outside of family and friends. Plenty of threads exist, but you'll have to budget for an IR or FI rating too for your son to stand any chance of flying regularly for a 'living'

[staywet]

A £350 gift is too obvious and the thread tries to examine the vat element, which a gift would not deal with. So I have introduced a vatable product, eg a photo.

We can develop the idea examining whether a £350 gift given now, in return for an hour once qualified next year, constitutes commercial work before qualification, and therefore wrong?

If a gift is given, does that attract vat? No !

If a gift is given with the promise of a "free flight once I am ppl", does that constitute a gift or remuneration?

If the £350 constitues a gift, its not cpl? If it constitutes remuneration it is cpl and should attract vat. It is therefore a commercial transaction entered into by a ppl? Is that allowed?

I know we cant charge for flying unless cpl, but can a ppl sell flights prior to obtaining the cpl as long as the flight is not conducted until after cpl?

[Pandalet]

Not directly relevant to the VAT question, but it's worth noting that for public transport (i.e. carrying paying passengers), you need more than just a CPL. You need to be employed by an AOC-holding company, with all the paperwork and procedures (and pounds of flesh to the CAA) that implies; your aircraft needs to be approved and on the correct maintenance schedule; your insurance needs to be correct; etc.

As Whirls points out, the easiest is to have family member who are so inclined to simply donate funds to your son's training, with no reward or exchange expected or implied. If he chooses to take some family members flying later on, that's entirely up to him.

I belive there were some issues with reclaiming VAT on a PPL, as it's not a professional qualification, and doesn't affect your ability to earn (and thus pay VAT on) money. Everything after the PPL is supposed to be VAT-reclaimable (in the right circumstances). However, I'm not an accountant, so I can't put any veracity or back-up to this.

[Sliding Doors]

Staywet,

I get the feeling that you're only really concerned about the VAT element. You need to consider both the VAT and the flying. It's quite clear you've some experience of VAT, and one would therefore presume you have access to an accountant? Best advice is to run your ideas concerning VAT past that accountant. As for the flying, please have a look at the link I suggested - it is the CAA guidelines on what constitutes commercial (aka Public Transport) flying.

A £350 gift is too obvious

No disagreement there

So I have introduced a vatable product, eg a photo.

You have but you've completely ignored who will be paying for the flying. The photo itself is only £350 because of the flying. In your scheme who pays for the flying and what are the implications of getting your friends to pay an inflated photo price in order to cover the flying costs? (particualrly if they come along and take the photograph themselves) Do you know that link might help you?

whether a £350 gift given now, in return for an hour once qualified next year, constitutes commercial work

You could look at that link again? If your friend is going to give a 'gift' on the promise of an hours flying, then your friend becomes a fare paying passenger. A PPL cannot carry fare paying passengers, and as you have already been told, merely holding a CPL won't change that legality situation. Would the friend still get the promised hour if they didn't donate so generously?

If a gift is given, does that attract vat? No !

Guess I was right, your primary concern is VAT. I'd start with a better question, 'As a PPL or a CPL what can my son do (flying wise) safely and legally?' There must be a link somewhere that'd help you start to answer that? (sensing a pattern here?)

If a gift is given with the promise of a "free flight once I am ppl", does that constitute a gift or remuneration?

Would the person still be given the free flight had they not 'donated'? You answer your own question! Lets cut to the chase, you're asking if family and friends can pay your son to take them flying? In simple terms the answer is no. The link will tell you all about cost sharing trips. Your son could conduct those

If the £350 constitues a gift, its not cpl? If it constitutes remuneration it is cpl and should attract vat. It is therefore a commercial transaction entered into by a ppl? Is that allowed?

What are the friends paying £350 pounds for? Answer that and you'll answer the first bit. The second answer is hidden within the licence titles - Private v Commercial. Any clearer?

I know we cant charge for flying unless cpl, but can a ppl sell flights prior to obtaining the cpl as long as the flight is not conducted until after cpl?

As you know that bit, you have answered your own question. In addition you'll need more than simply the licence to conduct commercial flights. Do you know I have a feeling that a link that I might have mentioned before would help you understand the legal implications of a PPL advertising his services, even for cost sharing trips.

Dont get me wrong, I can see what you are trying to do. The bottom line though, is that there is no easy or cheap way for your son to qualify and get a flying job. It is expensive and there is no way of avoiding most of the cost. There are some legal ways that costs can be slightly lessened - cost sharing and asking to reclaim the VAT. Bear in mind the VAT angle has been abused by many over the years, and HMR+C will look at anything you suggest very closely. Zero to CPL will cost about £50K. The licence alone won't see your son working. You/he will also have to budget for an FI (instructor) rating (about an additional £25K) or an IR (instrument rating - about another £45K) for your son to stand ANY chance of finding some work.

You also have to remember that the CAA tend to take a dim view on rules being broken, and that as a PPL your son will have to sign a self fly hire agreement at the school he rents the aircraft from. This agreement will most likely specify quite clearly what your son can and cannot do whilst flying. The school too will take a dim view on your son conducting work illegally, that they pay the CAA a hefty fee to be allowed to conduct legally.

[staywet]

Now thats a great answer.

The thing is pretty well black and white. Whilst you can reclaim vat on most training costs. It means you also must pay to the revenue all vat from any income. The above answer confirms that you cannot make any income from the flying element of your training until well advanced and licenced. If you try to find small areas of 'dodgy' flying income.....like selling photos etc....you must still declare the income for tax and vat. Putting your head way over the parapet and escalating any offence.

What manner of pilot do you want to be? In seeking pefection, or at least flying with exactness and skill and artistry, then we must be prepared to balance these flying characteristics with proper and professional attitudes whilst on the ground.

As a self employed pilot, there will be plenty of other areas of income that you can develop on the ground, to show the revenue that you are in business and not just flying for fun. I still recommend that you develop these income ideas into a revenue stream. Your business will then collect vatable income to offset the refunds that the Revenue will have to make.

You might find that the profits from these ground based activities will support your training costs.

I suppose I am saying, develop a complete self employed flying business with multiple income streams , dont just fly and pretend you are a self employed pilot, whilst working only at your normal day job.

As has been pointed out, the substantial flying income might be 5 or 10 years down the road. The Revenue should know this and accept they will be refunding the vat on your training costs for many years.

The above points I have made relate largely to air law which dont really belong in a vat thread and to some degree played Devils Advocate.

[nigelh]

He can still fly these family friends and get paid ( after his cpl ) without using an AOC if they lease the helicopter .....

[md 600 driver]

what then if

you work for a vat registered company as a gofor the company pays your training costs and reclaims vat [afaik up to now vat legal ]

you pay your company back with some additional hours unpaid or lower paid

[HillerBee]

If you take an the integrated CPL route all VAT is claimable, the only problem is to find an integrated course.

Building flying hours by selling pictures (and flight hours, albeit hidden) to family and friends would need an extensive family. Seems hard to get to a 1000 hours that way.

[500e]

Our accountant said forget it the revenue will query everything & it could trigger an in depth look at the accs.
Been there cost a lot & there was not a problem at the end!! but still cost a fortune in accountants fees, (still they were tax deductible though)
Listen to Whirls

[Gulfstreamaviator]

head bolt is correct in my experience at least

The word is INTENT, and any one can set up a limited company, and VAT registered in UK, and provided they trade with the intention of making a profit, then they are clear.

I had a run in many years ago with IR in regard to Benefit in Kind. They decided that I as a director of a (profitable) ltd company was using the business flying that we conducted in the "company" owned and operated aircraft, was a BIK to me, as I was the pilot, and thus getting flying for free, which otherwise would have been out of taxed income.
We were able to point out that by my piloting rather than hiring an outside person we as a company saved money, and also the aircraft was able to be a capitalist tool and assist in our exports we were actauly good boys. They went away.

I was not looking forward to my next IR renewal invoice being audited.

Glf

ps the Gas Man has almost as much power of entry as the VAT Man, I also suspect the RSPCA is as powerful!!!!!

[Sliding Doors]

GLF,

Your final comment got me wondering. FWIW 30 seconds and google found this

Visits by VAT inspectors | VATark

I am concerned though that anyone following the advice that a VAT inspector has no right of entry to premises to inspect records, so can be legitimately refused entry may find themselves on the wrong end of a charge of obstructing an officer of Revenue & Customs. An officer of Revenue & Customs has the power to demand the production of documents at the principal place of business and at “such time as the authorised person may reasonably require.” Now you could argue that this power doesn’t allow an inspector to demand entry.

Let’s deal with that issue. In Paragraph 10 of Schedule 11 of the VAT Act 1994 the officer of Revenue & Customs has “… for the purposes of exercising any powers under this Act … may at any reasonable time enter premises used in connection with the carrying on of a business.”

It’s quite clear that an officer of Revenue & Customs has the power to enter any business premises and inspect records at any reasonable time

Seems they do have more powers than the RSPCA or the Gas Man

[Whirlygig]

They do indeed ... and more powers than the police who would need a warrant to inspect same documents.

Cheers

Whirls

[staywet]

So is vat not reclaimable on modular?