Which EASA reg is best

I think the biggest reason people put jets on the M-reg is nothing to do with the aircraft.

It is tax.

The tax regime is extremely favourable, if the aircraft is owned by an IOM company. You get 100% capital allowances in year 1, which is priceless. There is also, AIUI, no Benefit in Kind, so a company owned aircraft can be used privately without getting into a mess.

There is also no trust required, yet a high degree of confidentiality can be achieved, so e.g. a business which is busily screwing its suppliers and customers on pricing can own a business jet off the books.

The Channel Islands will be offering something similar, but they don’t have the IOM VAT system which has some benefits (beyond my understanding).

M-reg does not allow FAA Part 91. They require the full manufacturer’s MM to be done, so in effect it is fully EASA Part M (but they don’t call it that). The 2-reg will be the same – the UK CAA won’t give it any choice.

There is no indication that EASA is going to act against N-reg aircraft, below the present “EASA complex” threshold (5700kg, 19 seats, jet, ME TP, etc) which was going to require a Part M signoff (not sure where that reg has got to). Anti-aircraft measures were proposed by France in 2004 and the UK in 2005, both as long term parking limits, and both dropped it. In Europe, only Denmark has such a reg on its books, in effect limiting long term parking of the aircraft on that country’s soil. I don’t know if Denmark will be removing that reg now, because it is probably illegal under EASA. I have the refs to all this on my website somewhere…

That isn’t to say EASA isn’t going to do something one day, but they have used up so much political capital driving through the EASA FCL attack on N-regs, and the EU is so much weaker politically, that I just can’t see anything happening in the foreseeable future.

And if the UK votes for a “NO” that will demolish the present European picture anyway, and no N-reg pilot in the UK will need to get (or revalidate, if they have them) EASA licenses or ratings.

Good points Peter, although financial considerations are pretty low on my priorities list, important points are an EASA agency, ability to fly on an FAA IR and also availability of FAA STCs for some kit I want to install in the aircraft, notably the Garmin satellite weather which is cabled for but not installed due to the STC nonsense !

I have had all the costs for certification etc from ASG (who are fitting my aircraft with G500 GTN 750/650 at the moment) and they are pretty acceptable IMHO

Going to meet up with the relevant parties when I collect the aircraft next week and will report back on any new nformation received.

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I think the biggest reason people put jets on the M-reg is nothing to do with the aircraft.
It is tax.
There is also, AIUI, no Benefit in Kind, so a company owned aircraft can be used privately without getting into a mess.
bq. Quote

It’s seems to me that the BIK taxation strikes as soon as you’re a (shadow) director of the company which owns the aircraft, and UK resident. If the company is registered overseas, it just makes it less visible.

Not if you are personally paying all the costs, wheres the benefit then?

According to HMRC
Section 205(2)(a) ITEPA 2003 determines that when an asset is placed at the disposal of a director or employee (see EIM21631), the amount of the cash equivalent of the benefit is the annual value (Section 205(3)(b)) plus additional expenses.

If you want to avoid the taxation, you have to pay the expenses plus a fifth of the value of the aircraft each year. For ever.
I cannot see any loophole in that piece of legislation. If you’re a UK resident, you just have to purchase your aircraft yourself, unless you can prove to the satisfaction of the taxman that the aircraft is not for you to use when so you wish, and it seems to me impossible to prove such a thing as long as you control the owning company.

The UK BIK issue is big and complex, as I know very well personally.

Almost nobody willingly pays 20% of the asset value each year. That would be simply stupid. It is economical only with certain extremely high depreciation items e.g. a business suit.

There are multiple defences to an attack under BIK. One of them is to make the asset available to unconnected outsiders at the same rate which you pay yourself. That is actually on the HMRC’s own website. And this is the reason we sometimes see planes available for rent at a stupidly low rate.

Unfortunately the HMRC uses various dodgy means to collect tax and one of these is to mount an aggressive attack in the knowledge that only poor people (or very rich people with nothing to do) want “justice”; and any successful businessman will be pragmatic and will write a cheque to settle the matter. £10k-£30k gets the inspector off your back, and he can run 30-50 attacks concurrently, with each “enquiry” running for an average of 1 year. He just needs to pick any business making good money. One of the things they do is they say the business was not set up to make a profit. Well, not many rented-out planes make a profit after capital allowances have been put in… The above “outsider” rule does not require the business to make a profit but as I say almost any businessman will just write a cheque to get them off his back – because a tax barrister starts at £10k for preparation plus 1 day’s work at the hearing, and you could lose.

One of the biggest problems is that most accountants do not want to aggressively argue with HMRC – in case HMRC starts to give trouble to their other clients. The average accountant wants an easy life. Also most accountants are not very clever. Most of their work is boring everyday stuff. An aircraft owner doing anything even slightly nonstandard needs to use an accountant who specialises in high net worth individuals and who knows this stuff. Horses, boats, planes and brothels all get constant HMRC attention and the correct type of accountant needs to be used if you want to argue with HMRC.

The best way to run a plane that’s used partly for business and partly privately is to own it 100% privately and charge the pro-rated (as per the respective % of airborne time) % of the total costs to the company. That is an old established principle. You could do with with a car too but most people use the 40p/mile or whatever standard concession, not least because they usually make a nice profit on it.

it seems to me impossible to prove such a thing as long as you control the owning company.

Well, you can, otherwise every Director of every company that owns a bizjet (and who theoretically has access to it for private use) would be taxed on the BIK, which they obviously aren’t.

Not if you are personally paying all the costs, wheres the benefit then?

Almost nobody operating a TBM or bigger is running it as a purely private operation. 99% of the pilot/owners are successful businessmen.

And you won’t be able to put anything smaller onto a M-reg or 2-reg unless you live there, in which case they will let you do it as a service to the local residents.

The best way in the UK is to run the entity through an LLP. No BIK. But you do need to charge yourself the same rate you charge your business.

No such simple answer.

’ And you won’t be able to put anything smaller onto a M-reg or 2-reg unless you live there, in which case they will let you do it as a service to the local residents.’

Not correct I already have acceptance of my aircraft, I don’t know about the Isle of man (and don’t care!)

Mind you it does spend most of its time on Guernsey :)