Taxpayer wins in helicopter case
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8th May 2013
The taxpayer has won in a tribunal which involved the
complicated case of input tax deduction for a helicopter that
private use attached to it.
The helicopter was owned by a company that engineered
parts for 4×4 vehicles, primarily those made by Land Rover. The
aircraft had the company’s logo applied
to its sides, and was used in the business, both for marketing purposes
customers who required urgent deliveries of parts. However, it was also
leased to an unconnected
party, and also to one of the company directors and his son. These were
the only people insured to pilot
The company charged VAT on all of the hire fees, and each
hire was charged at the same rate, with the unconnected party paying
as the director and his son. The company therefore
believed they were undertaking business activities. The company
recovered all the VAT on purchase
and charged VAT and accounted for VAT on disposal.
HMRC argued that the use was entirely private, and that they
saw no connection between an automotive parts supplier and the use of a
helicopter and so the Lennartz.calculations could not be used.
Tribunal felt the helicopter was being used to make taxable supplies
and that it
had also been acquired on the basis of making taxable supplies. This
support the client being entitled to
recover VAT in relation to the helicopter.
This analysis is useful in looking at private versus
business use, and this is often a tricky area to consider without
This can raises questions about recovery of VAT for
any of your clients’
assets (e.g. yachts,
aircraft, helicopters etc).
About the Author
VAT People are leading VAT and Customs Duty
consultants based in the
North West of England. We work with a wide range of businesses
throughout the UK as well as assisting our accountancy colleagues to
unravel the thorny VAT issues for their clients. We are one of the UK's
largest and most comprehensive sources of VAT and Customs advice, our
consultancy team having over 140
years of experience in VAT and Customs
gained in either HMRC or a Big 4 accountancy practice environment.
Call us on our VAT helpline 0800 077 4604 to discuss. All initial discussions are free with no-obligation.
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Article Published/Sorted/Amended on Scopulus 2013-05-19 12:27:21 in Tax Articles