Claiming back VAT on flight training

What, you can claim back VAT on your flight training? You probably don’t believe it. You might be surprised to even read the title, particularly if you perused the article on this topic in a fairly recent report in Flight Training News.

You may recall that it stated there, quite clearly, that flying students in the UK had to pay VAT on their commercial flight training, unlike our colleagues in mainland Europe. And, of course, this adds about 20% to the cost of getting professional aviation qualifications.

When I read the FTN article it jogged my memory. In fact, it took me right back to the time many years ago when I was working towards my commercial helicopter licence. You see, I managed to claim back all the VAT on my commercial helicopter training, saving myself a substantial amount of money. So, how did I do this, and can anyone else do it?

It is only possible to claim back VAT in fairly specific circumstances Unfortunately, the FTN article was correct, at least for most students. It is only possible to claim back VAT in fairly specific circumstances.

So, let’s have a look at what those circumstances are. Briefly, if after you qualify you are going to be self employed and run your own business, you can claim back the VAT on the training required to conduct that business. That is the only situation for which it is possible.

In my case, I planned to be a helicopter instructor and would therefore be considered self employed by most flying schools. So, of course this won’t work if you’re going to train towards an ATPL and then plan to get an airline job, as is probably the case for many readers of this article. So, if that is the case then you can stop reading now!

But in other situations? Well, let me explain exactly what I did and you can decide if such a path might be possible for you.

It was many years ago and I was about to start hour building and ground exams for my commercial helicopter course. I was also spending quite a lot of time on a well known (at the time) aviation website and people there were discussing this very topic.

Some of them, it seemed, were managing to claim back the VAT on commercial flight training. One person had even managed it for everything from PPL training onwards, including his hour building, ground exams and so on.

So, I asked questions on that website and then I started researching more thoroughly, hoping I could do the same thing. After all, if I could, it would save me about 20% of the cost – a substantial amount as helicopter training is not cheap.

It seemed that I had to set up a flight instructing business first, which I planned to run in the future I found out that it could be done, but you had to go about it in the right way and jump through quite a few hoops. It seemed that I had to set up a flight instructing business first, which I planned to run in the future.

Then I could register the business for VAT and after that I could claim back the VAT paid on the training which was required to enable me to conduct my future business.

Having no idea how to register for VAT, I first went to see an accountant, hoping he could set it up for me. But he’d never heard of such a thing and thought the whole idea was ridiculous! So, to make absolutely sure, I decided to phone my local VAT office and check. I was completely honest with them, simply explaining that I was doing helicopter commercial flight training and planning to be a self-employed instructor when I was qualified.

The VAT person was intrigued and I still remember the ensuing conversation: “Ah, you can do that for some types of training, but not others. But I’ve never had anyone ask me about helicopter instructing before; I’ll have to look that one up. Let me check… yes, that’s all fine.” She then gave me information I hadn’t even thought to ask for, such as details on time limits for back payments.

I remember that for some aspects of training it was possible to claim back up to three years
previously, though I don’t now recall the details.  But it was all possible and that was the main
thing!

Anyway, I went to see that accountant again and to give him his due he wasn’t too annoyed about having been wrong. He set it all up for me and explained how VAT returns worked. I was in fact already registered as a sole trader for income tax purposes, since I worked as a self employed researcher and writer at the time. It was compulsory now to register all my businesses for VAT if I was registering one of them, so I had
to register that one first.

But after that it was simply a case of adding in my new business as a helicopter instructor. It was actually all quite easy and I didn’t have to set up a limited company or anything else complicated, as I had feared. Indeed, once the set up was done, I could manage the whole thing myself with no further need of an accountant.

I had to charge VAT on my research and writing business, but nobody minded, as the companies I worked for were VAT registered anyway. I gathered – from that same aviation website – that this would also be the case in the future when I worked for helicopter schools. This might all sound complicated if VAT registration is new to you, but trust me, it isn’t!

In a way it all seemed too easy, perhaps too good to be true, but any doubts I might have had were put to rest by a ‘courtesy call’ that I received from my local VAT office some time afterwards, wanting to know how I was getting on with my VAT registration. I again explained the whole situation to them quite honestly, asking for reassurance that it was OK, and I was again assured that it was. I was then asked my turnover, which for my research and writing business was way below the VAT threshold at which registration was compulsory.

The VAT person then asked: “So why have you registered for VAT?” But before I could reply she’d worked it out for herself: “Oh, I see, it’s because you want to claim it back on your helicopter training”. Feeling ever so slightly guilty, I said that was indeed the case and she seemed to think that was quite an acceptable reason. She said that I might have a visit “just to check you’re coping with the paperwork” but the visit in fact never materialised.

The company I mainly worked for said it probably wouldn’t – the VAT people would realise they were not likely to make much money out of me for a while and wouldn’t bother coming out to visit. I really didn’t know, but I relied on being totally open and honest about what I was doing… and keeping my fingers crossed.

So, to cut a long story short, it all worked out perfectly. Over the next couple of years I claimed back all the VAT for my commercial and instructor training and when I started instructing I charged VAT and nobody turned a hair. I did the same thing with my research and writing business. It involved a little more paperwork than before, but not very much, once I got used to it and it saved me a substantial amount of money.

So, the million dollar question, can you do the same thing? As stated earlier, only in specific situations where you intend to gain your flying qualifications and then be self-employed. In that case, it should be possible, whether you fly fixed wing or rotary aircraft, and whatever type of flying business you are planning to conduct. But don’t take my word for it; things may have changed in the intervening years and I’m not a VAT expert anyway. And before you ask, I don’t know what happens if your plans change, or if you never make any money from your aviation business.

Call up your local VAT office and ask about all of this. And then be prepared to have the answers ready if any accountant you use has never heard of the
whole thing. And after that… good luck!

Author: FTN Editor

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