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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 potentially had private use attached to it.

The helicopter was owned by a company that engineered specialist 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 and for 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 craft.

The company charged VAT on all of the hire fees, and each hire was charged at the same rate, with the unconnected party paying the same 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. Thankfully, the 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 specialist support.

This can  raises questions about recovery of VAT for any of your clients’ assets (e.g. yachts, aircraft, helicopters etc).

About the Author

The 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

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