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Aircraft VAT / import VAT / getting busted upon landing in the EU (merged thread)

It could mean several things:

  • he knows that import VAT has not been paid i.e. it was imported without disclosing the import to Customs. That’s an amazing thing to put in an advert because he could get a visit from Customs
  • he does not have the original documents, which is probably pretty common but very few people advertise it
  • he misunderstood the meaning and is saying there is no VAT on it
Administrator
Shoreham EGKA, United Kingdom

The plane is Reims built and prob99 never left Europe more than a few days.
It is operated by a company though, and the cell number is the one of the company operating it.
But I don’t get how you can buy a plane through a company to avoid VAT and register it to your name.
A proof of sale is required to register the plane in France.

Last Edited by Jujupilote at 27 Jul 14:41
LFOU, France

how you can buy a plane through a company to avoid VAT and register it to your name

What you can do is a process over many years

  • set up a VAT registered company
  • company buys the plane, pays VAT
  • company claims back the VAT (UK HMRC ask lots of questions at that point e.g. about your business plan)
  • company writes down the plane over some years (say 25%/year)
  • Joe Bloggs buys the plane from the company, paying the book value plus VAT

So, over years, the aircraft value in the books reduces, and eventually the aircraft can end up owned privately by one of the directors, who paid a reduced VAT amount. If there is some damage history, that helps…

But there is no way to do this in one go, legally.

Obviously if Joe Bloggs was some unrelated person, the company would not sell it at book value. It would sell it at market value, which may be lower than book value (then the company books a loss) or it may be higher, especially right now (then the company books a profit and has to pay corporation tax on it).

And the process is “provocative” to the taxman, for obvious reasons; much more so if the company would otherwise be making taxable profits but the capital allowances on the plane reduce or nullify those profits and the plane is used privately… They just hate people doing that.

Administrator
Shoreham EGKA, United Kingdom

Post Brexit I don’t know if an EU VAT PAID aircraft is any use for a private (not VAT registered) UK buyer? Anyone know?

Darley Moor, Gamston (UK)

This came up some pages ago. It seems that you have to pay the UK import VAT, regardless of whether it was already paid in the EU.

Puts a damper on Brits buying planes from the mainland…

If anyone knows different, they aren’t saying

Administrator
Shoreham EGKA, United Kingdom

Peter wrote:

It seems that you have to pay the UK import VAT, regardless of whether it was already paid in the EU.

… for the planes sold by the private sellers – you are buying it from a company, you pay VAT once, when you import it, AFAIK.

EGTR

Sorry; I don’t understand.

Administrator
Shoreham EGKA, United Kingdom

Peter wrote:

Sorry; I don’t understand.

Peter, what I meant was that if you as a private individual buy a plane from an organisation in the UK or EU, you would always have to VAT.

EGTR

Peter wrote:

This came up some pages ago. It seems that you have to pay the UK import VAT, regardless of whether it was already paid in the EU.

AIUI, any product a UK citizen buys from Europe post Brexit will attract import duty and that in turn will attract VAT.

Forever learning
EGTB

Stickandrudderman wrote:

AIUI, any product a UK citizen buys from Europe post Brexit will attract import duty and that in turn will attract VAT.

This means that for a UK buyer looking at mainland europe the VAT status is meaningless, it’s the same as buying from the USA. budget 20% VAT on import.
The only savings for UK private buyers are with UK VAT paid aircraft.

As an aside I can never understand how so many small aircraft are for sale “plus VAT”. This implies they are owned by a VAT registered person, and getting the tax authorities to accept that concept is not easy, at least in the UK.

Darley Moor, Gamston (UK)
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