What are the pitfalls of your company owning an aircraft?

[GulfStreamV]

I am looking into the possibility of purchasing a small twin engined aircraft. I am also in the position of running my own ltd company business. Does anybody know of all the pitfalls associated with the company owning and operating the aircraft with regard to the taxman?, how do you justify part business part pleasure?, Does this hit you Benefits in kind coding?

I am always looking in the Pilot new registrations section, and seeing XYZ Printing Co registers G-ABCD etc so a fair few are doing it.

Many Thanks

GV

[Unwell_Raptor]

It's fairly okay so long as yours is a private businesss.
Professional investors have long been aware that when they see:

Flagpole outside office
Queens Award to Industry
CEO on Government Committee
Management Consultants regularly used
Corporate aircraft,

Sell, sell, sell!

[foghorn]

GulfstreamV,

I am not an accounting expert, but I am sure that I have read that the Revenue does have a mechanism for dealing with company aircraft used on a business/private split, just like they deal with company cars and motorbikes.

The only way that you are going to get around it is to charge yourself a fair hire rate + VAT for private flights.

[LowNSlow]

GV, I had an Aerobat that I rented out to flying schools and put it through my Ltd Company. It was a genuine buisness decision, when I rented it to the Cardiff Police Flying Club, I didn't even see it for 8 months.
The local (Swansea at the time) Tax Office decided that as a Director, I had sole use of the aircraft as per a company car. Despite explanations, copies of contracts and my log book showing that I hadn't flown it they gave me grief for 4 years. They would always put down "benefit in kind" on the tax bill without specifying what it was for. I refused to pay it unless they gave me a detailed breakdown of the total amount. The person behind this had previously clipped a guy in Swansea with a PA-28 which he flew for buisines use as well as private and put through his Company for. He got a bill for £25,000 unpaid benefit in kind and she obviously thought she could get away with it again. I had 2 hearings which were aborted by the IR when they realised that their facts were wrong. Eventually the lady concerned got a new boss who must have actually read my file and it all disappeared.

The benefit in kind is calculated on a market rate that the IR decide and is applied on an 8 hours per day basis as the aircraft is theoretically available to you for that period. Forget weather, maintenance or that you weren't even in the country. It is available to you so they tax you on it. Brutal is one description. One way around it (according to my accountant) is to have 2 or more aircraft which qualify as a fleet (like delivery vans)or have 2 or more directors that use the aircraft, that way it is treated like a pool car and escapes benefit in kind.

Whew, hope that's of some help :)

[This message has been edited by LowNSlow (edited 18 March 2001).]

[GulfStreamV]

Thanks for that LowNSlow, Does sound like I need to research it v.carefully and seek some professional advice!

GV

[LowNSlow]

Seeing a good accountant who doesn't see aircraft as esoteric toys for rich boys could be a good plan.