Is it the BIK issue looming?
If the plane were N-Reg, I would just fly it as a personal possession. That’s my goal. But it’s owned by a UK company (I am 100% owner) & that means tax reporting. I’ve also had some inquiries about rental/block time, but would prefer to do it it above board, legally, reported, etc etc. It may be that a flying club format is best… I have got the plane sorted, but all the legal aspects of ownership, not so much…
BTW I’ve read your reports on doing something similar. Quite helpful.
(To Nil, Yes, the BIK issue is what has me worried. Bloody hell, I’ll pay my company market rates for a dry lease and VAT on top, etc, etc—but I am getting worn down by the effort of doing everything that is asked of me from a licensing, regulatory standpoint. I wish I were a scofflaw by disposition. It often feels like the only valid response to EASA craziness.)
The basic q is what are you trying to do?
fly my plane with minimum hassle
Well, them going N-reg is definitely the best move. Even though probably not for tax reasons, but everything else…
If you own it and are the only pilot then just own it.
Why do you think you need a company?
Model & year of plane in question ?
PM me if you prefer.
Remember you will have to pay VAT if you sell it to yourself from the company.
As Peter said earlier, why bother with a company at all, just own the aircraft yourself. The tax climate in Europe is decidedly against corporate ownership of personal goods.
Ownership and aircraft register are separate matters
I make the comments below without any responsibility whatsoever on my part. People needing professional advice need to engage properly with an adviser who can understand their clients’ individual position and their needs and to agree proper terms for such advice.
You have a UK company that is VAT registered and which owns your G-Reg plane and you have complex tax position to sort out not least because you are a US citizen, not resident in the EU.
There is no difference for UK taxes if your company owns a G reg plane or an N reg plane. It’s still a plane.
Your company’s tax status (for UK corporation tax) is governed by a complex set of rules, but for straightforward companies the basic (and probably overriding) position is that if it is managed and controlled in the UK then it is liable to pay corporation tax in the UK on its worldwide profits. (The regulating state of your company’s plane, and your personal tax tax residence position are irrelevant to the company’s own tax status.) If your company is not managed and controlled in the UK then you need to consider whether it has a branch or permanent establishment in the UK in which case the profits of the UK branch / PE are taxable in the UK.
Separate from your company’s tax status (which is relevant to the taxation of the company’s profits), there is your personal tax status which affects your personal tax liability. If you personally are not resident in the UK for tax purposes you are still liable to UK tax for income arising in the UK and so still be liable to pay tax on benefits in kind provided to you by a UK company in connection with your UK duties of employment as a director of your company! Moreover, your personal tax status by being a US citizen is unusually complex. The US authorities seek to tax you forever on your worldwide income notwithstanding where you live (this makes the US unusual in international terms, and unpleasant of course) and the UK authorities will also decide to tax you personally if you are tax resident in the UK under the relatively new UK Statutory Residency Test. If both jurisdictions want to tax the same income, you’ll end up paying at least the higher of the two countries’ taxes, subject to complex rules of set-offs and credits and reasonably large accountancy fees! Clearly your position is complex and you need professional advice.
Did your company reclaim VAT on the purchase of the plane when the company acquired it? If not, then de-registering the company for VAT (with proper professional advice before you do this) may be the best step forward. That way the company can transfer the plane to you either in a straightforward way or perhaps as part of a solvent winding up, or as a dividend in specie, depending upon the company’s current tax position and what else it owns and your own tax position.
I’m one of the partners in an accounting practice with 150 people and I own my plane personally, not in a company. For sole owners who do not undertake plane-related business with third-parties, I cannot understand why they would want to put their plane inside a company – although I do know that many people do…and then have accounting and tax costs that they would not otherwise have. Makes no sense at all to me because people tell me that the pilot flying is personally liable for damage caused in an accident, regardless of whether a company owns the plane.
I do however see some sense in having a company own a plane if there are a number of joint owners – company law in the UK, that govern the different roles of shareholders (owners) and directors (managers) provides, in my opinion, an excellent basic governance structure on which to base co-ownership. For instance, the company (i.e. the owning group as a whole) would often be the proper claimant in relation to one of the co-owners that failed to pay his or her dues, caused damage to the plane, or simply went awol, as often happens – a constitution (shareholders’ agreement / articles) if properly drafted can deal well with all such things…but then with a company, one has BIK issues and tax and accounting compliance costs once more: so one has gained proper administration rigour for the group by having a company, but lost out with all the tax and accounting nonsense interfering with one’s hobby! I really hate the idea of having to deal with all that during my time off!
Howard
