Was it N-reg?
Flyer59 wrote:
Was it N-reg?
Yes, sorry forgot that important part !
How are so many Cirrus for sale as + VAT? Are they all owned by VAT registered companies for business purposes or is there a mechanicism to pay VAT on a ‘use’ basis?
dublinpilot wrote:
If you buy a computer from your local retailer, and pay them the VAT, but the next day the retailer goes bankrupt and never pays the tax over to the tax man, then the VAT was never paid on your computer. But the tax man doesn’t come after you for it. And it’s not just due to value. It could be a warehouse full of computers, and he still won’t come after you for it. You’ve done your bit. Otherwise every purchaser would require an indemnity that they would only release on proof that the VAT has been remitted to the tax man. Clearly business would grind to a sudden halt under such a system
There you have the basis for classic VAT carousel fraud. The bad people obviously control all parties in the transaction change, and the authorities have to prove that fact to get them for fraud. It has become traditional to do it with mobile phones rather than computers.
dublinpilot wrote:
Rather the only illegality has been tax evasion. There is nothing illegal about the aircraft itself
I’m not so sure. Tax evasion is only a part of it. You have also illegally imported it. You have not imported the aircraft while following the procedure of the law. What you have done is in fact smuggling an aircraft into the country. Smuggling is a more serious offence than tax evasion, which could very possibly make the aircraft illegal. Exactly “how illegal” it is, probably varies. I can import guns or (legal) nerve stimulating prescription drugs for instance. If that is not done correctly, you can be 100% sure that the police will confiscate every bit of it if they found out, and I will be put in jail for a long time. On top of that I would be charged for tax evasion.
Just because aircraft can legally fly across borders doesn’t make smuggling a less criminal offense. On the other hand, smuggling an aircraft is probably no more serious than smuggling a lawn mover for all I know, and then there is a difference if you smuggle truck loads to sell on the black marked or a single for private use.
The only way to handle this is compulsory registration in a central register and/or complete paper trail of transactions and other legal documents, proof of conformity to standards and so on.
This reminds me of a real PITA problem I ran into importing a 1947 Cessna 140 project from Switzerland to France.
The 140 was completely disassembled and put on a trailor and towed back to Paris.
The French customs authorities at the border told me I needed to prove that the airplane was NOT a MILITARY ARM !
I had to un-hook the trailor and leave it in on the Swiss side whilst I drove all the way back to Paris to get a signed affidavit from the French Defense headquarters attesting that a Cessna 140 is not considered a “military arm” !
What a [expensive] joke .
Afterwards, I then baptized the 140 “L’ill Swiss Bomber” …
I agree, although that example has another problem which is that retail prices are normally deemed to include VAT so if the company didn’t charge vat they lost the money anyway.
It doesn’t have to be. The exact same principal applies if the sale is between two businesses.
There you have the basis for classic VAT carousel fraud. The bad people obviously control all parties in the transaction change, and the authorities have to prove that fact to get them for fraud. It has become traditional to do it with mobile phones rather than computers.
Where there is fraud, there will always be extra options open to the tax man. This is very different to an arms length transaction where someone innocently buys an asset and pays the VAT and unbeknownst to them, the seller doesn’t return the VAT.
Tax evasion cannot be enforced after ten years, in Germany
We have a similar rule in Ireland, but it doesn’t apply to fraud. The Revenue Commissioners (Tax man) can only raise tax bills going back four years, and they can only make enquiries going back 4 years. However if they have good reason to believe that there was fraud or unpaid tax going back further than that, then they can make enquiries and can raise tax bills. But they need the evidence before they can start looking for it.
Here in the UK they can go back as far as they want if there is evidence of fraud which continues back in time.
But IMHO the main worry underlying this VAT issue is not in your personal taxation. Most business/professional people are to a large degree on their “home ground” in that situation. Also, in the UK, the tax people cannot impose an on the spot fine and impound your plane or whatever if you cannot find the money there and then. They have to follow due process and this means they are not going to get heavy with somebody they picked at random.
The worry is with an airport “policeman” (a customs officer really but how can you tell?) impounding your plane because he is looking for some specific kind of document, until you find the money, and obviously you have no appeal, no defence, no power at all. Obviously if you have money and power then you will have the phone number of a lawyer who will know a lawyer in the relevant country and people are going to make some heavy phone calls on your behalf. But a normal GA pilot, sitting at some airport where almost nobody speaks a word of English (like me this morning at Pamplona) is in a poor position.
How are so many Cirrus for sale as + VAT? Are they all owned by VAT registered companies for business purposes or is there a mechanicism to pay VAT on a ‘use’ basis?
Probably because they were originally bought by VAT registered companies, who then must charge VAT on the sale.
There are two separate markets for used planes:
To a private individual, the latter planes will be more expensive because somebody along the line lost the VAT so they want to get their loss back 
dublinpilot wrote:
While it might still be a problem, why is it your problem and not the importer’s problem?
I think its because you have the asset and they have the power over you and your plane. As in seizure. They could care less if it is legal or not, fight it in court.
Then you speak to a lawyer and make a business decision $100K for legal fees or $25Kfor VAT. Of course 99% will cave in and send them the money.
I think its because you have the asset and they have the power over you and your plane. As in seizure. They could care less if it is legal or not, fight it in court.
Then you speak to a lawyer and make a business decision $100K for legal fees or $25Kfor VAT. Of course 99% will cave in and send them the money.
Exactly right!
And they get paid for doing it, so…. what do you expect?
