The deadline for the UK to leave the EU at midnight on 31 December 2020 is fast approaching. Unfortunately, a trade deal has not yet been agreed between the UK and the EU, therefore, aircraft owners need to consider all eventualities and plan for how either a “hard” or “soft” Brexit will affect the VAT status of their aircraft.

For VAT purposes it is believed that a “hard” Brexit will result in two separate VAT areas (UK/Isle of Man and the EU), whereas a “soft” Brexit will result in a shared VAT areas for the UK/Isle of Man and the EU.

Possible outcomes of Brexit for aircraft range from the hopeful: ‘grandfathering’ (anything imported prior to Brexit will retain its importation status after Brexit), to, the perilous: importation status of the aircraft becoming dependent on its physical location at the moment of Brexit.

The truth is that nobody knows what will happen and there is no clear legal sign of what the outcome will be.

The actions that aircraft owners can take now are:

  • To check the current VAT status and ensure they have proof of that status of their aircraft. This will either be a Single Administrative Document (“SAD”) for an aircraft that was imported or an invoice from when the aircraft was purchased. A SAD document will have the same format in every EU member state.
  • To assess their current aircraft use and flight patterns. It will be important for residents in post Brexit Europe and in the UK to determine how much flying they actually do into and within the EU and UK, how regularly they do it and whether that flying is on a business or personal pleasure use basis. This will help to determine the aircraft owner’s EU or UK footprint and therefore what solutions may present themselves when considering the owner’s other business and personal affairs.

Don’t wait for Brexit – take advice! Engage with an advisory team as soon as possible to minimise disruption and maintain the aircrafts schedule.