Aviation charity wins five-year VAT battle over aircraft modified for disabled pilots

Aerobility will receive a £20,000 rebate from HM Revenue & Customs after the upper tribunal ruled that one of two planes should be zero-rated for VAT

Aerobility's plane
Aerobility's plane

An aviation charity has won a £20,000 VAT rebate from HM Revenue & Customs after a five-year wrangle over two planes it purchased to provide flying opportunities for disabled people.

In 2008 Aerobility, previously the British Disabled Flying Association, purchased two Piper PA-28 planes with modified hand controls to allow people with disabilities to operate the rudder pedals without the use of their legs.

Aerobility claimed that the aircraft had equipment "designed solely for use by a handicapped person" and should therefore be zero-rated for VAT, but HMRC said that the planes should be standard-rated.

In 2011 a first-tier tribunal ruled in Aerobility’s favour, but HMRC appealed against the decision to the upper-tier tribunal in 2013.

The upper tribunal ruled in March that one plane was modified for disabled use after purchase, but the other had been modified before purchase – so the purchase of one plane was standard-rated and the other one was zero-rated. Both sides have decided not to appeal further.

Mike Miller-Smith, chief executive of the charity, said the main benefit of the tribunal's decision was not the rebate, but the fact that future planes could be purchased without incurring VAT.

"We’re planning to buy another plane for about £100,000 this year," he said. "They are expensive things, and we anticipate replacing our three planes over five years. So this represents a significant saving to the charity."

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