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HeliTorque :: View topic - Claiming VAT back in the UK
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HeliTorque Forum Index » Wannabes

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marine1983
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PostPosted: Thu Jun 24, 2010 11:53 am    Post subject: Claiming VAT back in the UK Reply with quote

Hi all,

I have been registered as a member for a while but not really posted. So let me introduce myself. My name is Chris and I have 9 hours in the R22.

I had until recently put my flying on the backburner due to costs. But I took a shot at the Hover challenge at helicentre's new base at leicester the other weekend. In short I have been hooked again, and now realise this is the career I want to achieve. Hello Sarah, and thanks to mark (I think) for the spin in the 300. Never flown one before and very nice indeed.

Anyhow back to my point.

I know you can claim VAT back through a company for which you setup. With the raise to 20% next year (cheers labour) It makes alot of sense to try and claim this back. I work in the IT sector and currently have my own company for tax purposes already. It is also flat rate VAT registered.

My question is, can I setup another company as a director? Even though there will never be any money crossing its books other than claiming VAT. I know this is totally legal. But Im also aware people have been chased by the tax man for fasley claiming VAT, due to them not completing the courses.

I realise this is a grey area in terms of what is right and wrong. My understanding is you must complete to CPL H for the VAT claims to be justified. Now this is a big risk what happens if you run out of money? Lose health status etc?

Will the tax man come knocking?

Im just after advice from other people about how and where to start really and any loopholes or issues in going down this route.

Thanks in advance
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flip2
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PostPosted: Thu Jun 24, 2010 1:07 pm    Post subject: Reply with quote

Hi marine1983

I know this may sound unhelpful, but I highly recommend you run this by an accountant.

I have previously been voluntarily VAT-registered when not exclusively flying, so it is certainly possible. However, I did find a lot of contradictory and out of date information on forums regarding the matter.

I came to realise that I wouldn't rely on information from my accountant regarding principles of flight so I shouldn't be expecting accurate information from pilots about accountacy! I do know of one exception to this rule, but they don't appear to post on this forum.

HTH
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TJ
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PostPosted: Thu Jun 24, 2010 2:03 pm    Post subject: Reply with quote

flip2 wrote:
Hi marine1983

.....I came to realise that I wouldn't rely on information from my accountant regarding principles of flight so I shouldn't be expecting accurate information from pilots about accountacy! I do know of one exception to this rule, but they don't appear to post on this forum.

HTH


Hey Flip2, I should be able to help out on both Principles of Flight and VAT! ( as a PPL(H) Chartered Accountant).

Coming back to the original point, it is only possible to register for VAT if you are currently making sales or have a firm expectation of making such sales in the near future. When training for a PPL(H) this aspect does not exist.

There is no restriction in terms of the number of companies or businesses you can set up as VAT registered as long as the intention is not to avoid VAT by doing so (ie splitting up sales of one big business into several smaller ones to avoid VAT registration).

I will look into the specific question of claiming back VAT on training costs for PPL(H)/CPL(H) and post an update over the weekend!

TJ
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Hughes500
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PostPosted: Thu Jun 24, 2010 9:20 pm    Post subject: Reply with quote

One of my students who has claimed vat on pplh. cplh,ir and fi course is having a right royal battle with the vat man on this one. I will let you know the outcome !
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flip2
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PostPosted: Thu Jun 24, 2010 10:32 pm    Post subject: Reply with quote

TJ wrote:
flip2 wrote:
Hi marine1983

.....I came to realise that I wouldn't rely on information from my accountant regarding principles of flight so I shouldn't be expecting accurate information from pilots about accountacy! I do know of one exception to this rule, but they don't appear to post on this forum.

HTH


Hey Flip2, I should be able to help out on both Principles of Flight and VAT! ( as a PPL(H) Chartered Accountant).

Coming back to the original point, it is only possible to register for VAT if you are currently making sales or have a firm expectation of making such sales in the near future. When training for a PPL(H) this aspect does not exist.

There is no restriction in terms of the number of companies or businesses you can set up as VAT registered as long as the intention is not to avoid VAT by doing so (ie splitting up sales of one big business into several smaller ones to avoid VAT registration).

I will look into the specific question of claiming back VAT on training costs for PPL(H)/CPL(H) and post an update over the weekend!

TJ


Make that 2 then!

I do recall being told that demonstrating an "intent to trade" was crucial, and that the VAT man would take a dim view of claiming VAT back on training only to then disappear off to a salaried job meaning you never charged VAT on any of your services... it will be very interesting to see what you come up with TJ Smile

It is ridiculous that professional training is subject to VAT IMHO - I recall reading on a GAPAN document that the "logic" is that a professional licence also conveys private licence privileges, and it is not State-provided.
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marine1983
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PostPosted: Fri Jun 25, 2010 4:09 am    Post subject: Reply with quote

Hughes500 wrote:
One of my students who has claimed vat on pplh. cplh,ir and fi course is having a right royal battle with the vat man on this one. I will let you know the outcome !


This is my fear. I cant be doing with all the hassle of trying to prove yourself. My company has already been slightly inspected in regards to tax. Filing your tax return yourself is not recommended Smile I was lucky I only owed 200, that was stressfull enough. I was worried sick, thinking they will do a full blown inspection going back 6 years eek. But can you imagine paying all the VAT back its enough to really ruin your life.

I think I will just keep plugging away with paying the whole lot. I earn enough to cover 2 lessons a month. Unless JT can find something to help. Thanks for this.
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PostPosted: Fri Jun 25, 2010 8:37 am    Post subject: Reply with quote

Well I guess that makes 3 accountants then, although I'm way out of practise.

I have my own business, am VAT registered and have claimed VAT for flying costs, however, only for my FI and IR. There was a reason for this...
In my initial stages of training (PPL/CPL), it was very difficult to convince the tax man that I was going to be in a position to charge a fee for my services, as I was more likely to get a salaried job than be a self employed pilot. That's not to say that they couldn't be convinced, however, if it turned out that they were correct, then there was the possibility that they would fine me for defrauding them, as well as having to pay back VAT.

Once I was a CPL, then I changed my business description to include pilot services and registered for VAT, after one invoice for flying, the rest was easy. A word of warning here, if you claim training as a tax deduction, the tax man can/will view this as a capital expense, and therefore not deductible against income. It can be gotten around, but only if argued the right way. Definitely see a PRACTICING accountant about this.....

Just my two cents and all that................ Rolling Eyes
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marine1983
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PostPosted: Fri Jun 25, 2010 9:46 am    Post subject: Reply with quote

Yeah I think that will be the best bet. At least you can then argue the case and have a leg to stand on. Its to much of a risk especially when training, anything could happen and you never complete the training. The tax man would be all over you.

Anyhow on a lighter note lol I have my first lesson on sat in a while. It will be my 10th hour, lets hope Im not to rusty and forgotton it all. Oh the slow road to a license
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LoachBoy
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PostPosted: Fri Jun 25, 2010 9:54 am    Post subject: Reply with quote

For what its worth, I bit the proverbial bullet on my PPL, and did it as God (and the Inland revenue) intended.

For my CPL training, I then put everything through the umbrella company I use for my current 'day job' - he checked everything with his accountant up front - so PPL privileges covered by VAT; Company has got the VAT back on the commercial stuff, as I now operate through him for flying too!

Anyway - have fun, don't worry about being rusty, its like riding a bike..... only the stabilisers don't work so well on a 300!
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WhirlyGirl
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PostPosted: Fri Jun 25, 2010 9:48 pm    Post subject: Reply with quote

Hi Chris!

Nice to see you again last weekend. It was actually Nick that gave you the whizz round in the 300 and he said you flew really nicely despite the long break since you last flight!

For the record, I got all VAT back post-PPL by voluntarily registering (but I know many who have claimed back everything from the first trial lesson!). Although you can't charge for pilot services at that stage there are things you can charge for, such as ground crewing and sweeping hangars!

Everything I claimed back was completely justified and HMRC are doing well out of me as a result - had I not gotten VAT registered they would not be receiving the substantial amounts of VAT I am sending them every quarter. I will continue to collect VAT for them for as long as I am a freelance pilot, whereas if I hadn't bothered to register they would be getting nothing back off me.

I don't think they can argue with that - if I never made it to CPL(H) I suppose they would have had an argument to come after me to take it all back, but I did make it and they are better off as a result.

Hope this helps!

Sarah
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flip2
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PostPosted: Fri Jun 25, 2010 10:24 pm    Post subject: Reply with quote

Sarah has explained a little better what I was trying to get at - the VAT man is happy if in the long term you pass more VAT his way than you claimed back in the early days.

I was led to believe that the problem comes when you claim the VAT back on your training and go straight into a salaried position (typical example - offshore seat) - hence the need to show an intent to trade, thus a future intent to charge VAT on your services.
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rjc
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PostPosted: Sun Jun 27, 2010 9:09 am    Post subject: Reply with quote

I have a Ltd company with a fellow director, primarily for IT Consultancy but I did register flight training and services at the time we set it up.

Im looking to use some of the IT Consultancy income within the company to pay for my hour building and CPL(H) training, already having a PPL(H). My Accountant seems to believe this is fine, as I have always showed intent of going for a CPL(H), which can be shown by taking a Class 1 medical before starting my PPL(H) training. I would not look to recover VAT going back in time.

I think I will double check with him again, after reading this thread...
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veeany
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PostPosted: Sun Jun 27, 2010 12:58 pm    Post subject: Reply with quote

RJC,

I did almost exactly that and went from IT into helicopters and used the IT income to pay for the helicopter training, using it was fine but HMRC would not allow me to reduce the companies tax liability with some kind of argument about having two seperate lines of trade in the one company, the IT one could not be used to fund the other and reduce the profits of the IT line by doing so.

So don't expect a huge gain by doing, then again they may not notice.

Interestingly enough I still make more out of IT than helicopters despite being reasonably well qualified in the Helicopter world.
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rjc
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PostPosted: Sun Jun 27, 2010 2:19 pm    Post subject: Reply with quote

veeany wrote:
RJC,

I did almost exactly that and went from IT into helicopters and used the IT income to pay for the helicopter training, using it was fine but HMRC would not allow me to reduce the companies tax liability with some kind of argument about having two seperate lines of trade in the one company, the IT one could not be used to fund the other and reduce the profits of the IT line by doing so.

So don't expect a huge gain by doing, then again they may not notice.

Interestingly enough I still make more out of IT than helicopters despite being reasonably well qualified in the Helicopter world.


Very interesting, thanks, I like the bit over not noticing the reduction of companies tax - my accountant didn't seem to think this was a problem but worth noting in the sums just in case...
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PostPosted: Thu Nov 22, 2012 1:21 pm    Post subject: Reply with quote

Hi everyone,

With my long-term plan to go down the FI route & the CPL now under my belt, I'm looking to get myself set up as self-employed & reclaim the VAT on the CPL training, as well as the foreseeable training etc (I have a full-time job but I've been assured one can be registered as self-employed also).

I've had enough pilots tell me it can be done, so I'm looking to find an accountancy company / individual with experience of this 'pilot training VAT conudrum'; if you're happy to help, can you PM me with either details of specifically how to go about it, or the name of an accountancy company / individual who has direct experience with this? (if they're based in Derby / Notts / Peaks area even better)

I'm headed to see an accountant next week but they don't profess to have any experience of this particular area, so I'd be very grateful of any help on this one Smile

Cheers!
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