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Private Ownership vs. Company Ownership (non syndicate discussion)

All that is required to get tax free fuel is a copy of your AOC certificate. I’ve been doing it all around Europe. Not country dependent at all.

Does that work in the UK?

I know it works across Europe generally.

Before returning VAT on the aircraft purchase, the tax authority makes sure that you will be using the aircraft for business. The business is renting it out to an AOC holder (operator). It is not very complicated and absolutely legal.

Sure, but that is for something of interest to an AOC op e.g. a turbine heli, a King Air, a bizjet, etc. With piston GA this is a lot harder and basically your business plan needs to be supported with a rental proposal, which is quite difficult.

Administrator
Shoreham EGKA, United Kingdom

Peter wrote:

For example in the UK, and I think most other countries, you can register a VAT registered company, but you won’t be able to get the VAT back on the aircraft purchase unless you come up with a business plan.

True but I assume renting out the plane out to yourself as a private person is a valid business plan. The important bit is that the company breaks even or even better makes some profit and pays a little taxes on that. In too many cases there is a loss and then, for good reason, the tax people get angry.

loco wrote:

but if the aircraft can fly commerce and one makes it available to an AOC holder, then invoices are 0% VAT.

That is true if you run your own AOC with yourself as the only customer and then you get around VAT and mineral oil taxes in most cases. But this means you need to operate to AOC standard and you need at least some “passenger” if you act yourself as crew? On anything smaller than a jet I fear the disadvantages on AOC maintenance, paperwork, audits etc. are not worth the savings on fuel.

www.ing-golze.de
EDAZ

The important bit is that the company breaks even or even better makes some profit and pays a little taxes on that. In too many cases there is a loss and then, for good reason, the tax people get angry.

Precisely, but by the time you throw in capital allowances (depreciation) it is very hard to make a net profit One has to do a lot of rental to make a profit. I know this area rather well, from many years ago…

The UK restricts CA to 25% a year on a rented-out asset but still that sucks up profits very well.

Administrator
Shoreham EGKA, United Kingdom

Peter wrote:

Does that work in the UK?
I know it works across Europe generally.

It works the same in EU as well as UK, Russia or Turkey. Fuel for international commercial ops is tax free.

EPPO, EPPK

Sebastian_G wrote:

On anything smaller than a jet I fear the disadvantages on AOC maintenance, paperwork, audits etc. are not worth the savings on fuel.
Sebastian_G wrote:
True but I assume renting out the plane out to yourself as a private person is a valid business plan. The important bit is that the company breaks even or even better makes some profit and pays a little taxes on that. In too many cases there is a loss and then, for good reason, the tax people get angry.

But if you were to rent out your airplane from let’s say your operations department (which can be set up as an OpCo under a Holding company) to your consulting business which is fully owned by your Holding company as well and you were to incur a loss in your operations company you would be able to write of the loss on the operations department in your holding company while still paying tax on your consulting business. Just a bit less tax.

LFHN - Bellegarde - Vouvray France

LFHNflightstudent wrote:

But if you were to rent out your airplane from let’s say your operations department (which can be set up as an OpCo under a Holding company) to your consulting business which is fully owned by your Holding company as well and you were to incur a loss in your operations company you would be able to write of the loss on the operations department in your holding company while still paying tax on your consulting business. Just a bit less tax

And in the UK HMRC would group the companies together when calculating the tax. You cannot win by using contrived corporate structures, well not in the UK anyway. HMRC is a very advanced tax authority and any loophole you can think of they know about and have an answer. And if you come up with something new there is still anti avoidance legislation.

That’s probably a good thing in the wider context; if everyone pays the taxes they should it’s fairer all round.

Darley Moor, Gamston (UK)

Has anybody managed to get duty and VAT free fuel at the pump in the UK, ever?

I got it at lots of places many years ago, but it was never available in the UK. AOC operators (excluding airlines, so I am talking about some FTO running a Seneca under a “charter” AOC) pay the usual price and then reclaim the duty (and VAT if VAT registered which they usually are) separately from HMRC.

There are UK airports which don’t charge VAT if you are departing abroad that that’s a different topic.

Administrator
Shoreham EGKA, United Kingdom
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