Dos and Don'ts of VAT Compliance for Aviation

Date 21/05/2019
3 minutes to read
Ayuk Ntuiabane

VAT Director Ayuk Ntuiabane from Equiom Tax Services provides some valuable tips on VAT compliance for your aircraft. 

The world of VAT is complex and can easily make owning and operating an aircraft very costly. There are, however, a few steps you can take to be sure that your asset is protected and you don’t overpay where VAT is concerned.

DO

  • Consider VAT registration: if you are trading (no matter how small) in another EU Member State, VAT registration is mandatory, this may involve the appointment of a fiscal representative.
  • Always carry out research or seek advice when encountering a new business scenario.
  • Ensure that whoever completes your VAT declarations has ALL your business records for a tax period in a timely manner to allow the VAT declaration to be submitted on time.
  • Always ensure that your VAT declarations (and payments if required) are submitted before the date they are due, the due date for payment means the payment must be received by that date in the bank account of the tax authority.
  • Seek advice before the purchase of your aircraft to ensure that it is in the most VAT efficient structure.
  • Seek advice before any major repairs or refurbishments to ensure it is arranged in the most VAT efficient manner, keeping VAT exposure to a minimum
  • Consult or seek advice ahead of any asset movements including the purchase and/or disposal of your asset.
  • Plan ahead with regard to future movements of your asset, thereby ensuring that the required documentation is in place and that VAT regulations in the EU Member State are being adhered to.
  • Keep appropriate VAT documents aboard the aircraft to enable foreign customs checks to be cleared rapidly.
  • If your business activities/intentions change, keep your VAT advisors fully informed so they can assist and perhaps liaise with the relevant customs authority.
  • As Brexit may affect your current structure, take heed of current developments and discuss these with your VAT advisors.

DON’T

  • Automatically accept that your supplier must charge you VAT on their supply of either goods or services, VAT charged to you incorrectly cannot be reclaimed.
  • Use the aircraft for private purposes if it is VAT registered - VAT registrations are only appropriate where there are business activities and the aircraft must demonstrably be used for business purposes.
  • Rely on advice from persons who do not have a specialist knowledge of VAT.
  • Assume that countries outside the EU do not operate a VAT system, countries such as the United Arab Emirates now operate VAT-based systems for taxation of goods and services.
  • Assume that a VAT scheme you may hear about, is the most appropriate to you and your business. A specialist advisor would be best placed to give you bespoke advice for your business.
  • Assume that Brexit will not affect the VAT status of your aircraft.

If you own an aircraft or are thinking of purchasing one, contact Ayuk Ntuiabane for more information about how to prepare for VAT liabilities that may arise.

This article has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The article cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact Equiom to discuss these matters in the context of your particular circumstance. Equiom Group, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this article or for any decision based on it.

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