Indeed. But the point about the pilot’s personal assets being swept away misses the point of insurance.
I am not sure where the confusion lies.
If there is adequate insurance, you don’t need a Ltd Co (except for other reasons e.g. taxation – one of the M-reg advantages for some people).
If there isn’t adequate insurance, nothing will protect the pilot. But a Ltd Co should protect other syndicate members, and should protect the Director(s) provided they have discharged their duties correctly.
Admittedly there is no known case law applicable to corporate veil piercing in GA, but the arguments put forward seem reasonable to anyone familiar with the way normal business works.
I recall reading a writeup from a barrister working in aviation, who also worked for the CAA as a “taxi rank” barrister, saying that a Ltd Co would work perfectly well for the purpose described.
If there isn’t adequate insurance, nothing will protect the pilot. But a Ltd Co should protect other syndicate members, and should protect the Director(s) provided they have discharged their duties correctly.
I am not sure in what way you have in mind.
I recall reading a writeup from a barrister working in aviation, who also worked for the CAA as a “taxi rank” barrister, saying that a Ltd Co would work perfectly well for the purpose described.
What purposes had you in mind
Protection from liability due to actions of other syndicate members – as discussed earlier in the thread.
I were ever going to buy an aircraft, I would almost certainly put it into a company and rent the aircraft from that company by the hour. The main advantage would be that the company could deduct VAT from everything. Of course, I would have to pay VAT on the rent, but working and investment capital would be VAT-free. Also, my personal “direct operating costs” would be the full rental cost, which means that I could cost share the full operating costs on private flights.
@Airborne_Again I think plenty of people had that idea but how viable it is depends on the country. I think that in the UK in particular they would try to hit you with benefit in kind. I’m sure someone around here knows about it more than I do.
There are issues here in the UK but perhaps not BIK if you are the only pilot and don’t try to do any provocative stuff e.g. relieving the capital allowances (depreciation, crudely speaking) into the accounts of another business which would otherwise pay more corporation tax 
The tax people don’t give a damn how much money a Ltd Co loses and how big a loss its accounts show, and carry forward year after year. All they care about is that no tax is being avoided, and a Ltd Co which keeps posting a loss but which would never make a taxable profit anyway is not a problem
Claiming back VAT isn’t going to stand up to scrutiny either if the flying is all private, but if a % is business travel then VAT can be reclaimed on that % which is advantageous to the company on whose business you are travelling (assuming that company is VAT registered).
Obviously tax rules vary a lot but I would think the above would apply in various ways to most countries, because it is fairly obvious basic stuff.
And “my personal “direct operating costs” would be the full rental cost, which means that I could cost share the full operating costs on private flights” is very much true! I actually asked the UK CAA for a ruling on this, c. 2003, and they confirmed it is legal. It has to be legal otherwise a PPL who happens to work for a school/club from which they rent the plane they are cost-sharing would be in breach of the limit on which costs can be shared – because he is getting in effect paid out of the school/club’s rental receipts. Putting it another way, anyone who gets any benefit from a company which rents out planes could never cost-share in one of the planes. It’s quite a subtle point which would enable somebody to bust the cost sharing model. For example I could put my TB20 into a Ltd Co which rents it to me for £1000/hr and I could cost-share say £999/hr of that, and then draw out the (copious) money accumulating in the Ltd Co as salary/dividend! There may be some other problem with that but it may be that “they” hope nobody will think of it.
Peter wrote:
Claiming back VAT isn’t going to stand up to scrutiny either if the flying is all private
True. I somehow forgot to finish my posting. And the whole idea is to set up a rental business and play the role of a customer. Otherwise, as you write, you couldn’t claim back the VAT. Which they won’t like.
You should be aware that its incredibly difficult to get an aviation company registered for vat, our totally legit helicopter charter company (an LLP) was made to jump through many hoops including a visit to our offices by HMRC.
And we were operating under an AOC and employing 4 full time staff.
also just read the ‘renting back to myself form a limited company’ post
Don’t even go there, they will assess you for benefit in kind for the full value of the availability of the aircraft
If you must have the aircraft in a company use an LLP to avoid the benefit in kind trap.
