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Repossession and tax implications

As a result of the terrible events in Ukraine, we are aware several financiers are looking to enforce their rights under their lending and security. In particular financiers are considering either taking repossession of aircraft, or enforcing share security and taking control of the aircraft owning SPV.

If you are considering security enforcement, be aware the VAT status of the aircraft could be impacted and it would be beneficial to consider the tax considerations that follow from such action.

The VAT treatment of the aircraft in the UK and EU (to achieve its circulation status) may derive from the current owner or operator - any change to this structure may trigger a VAT liability for the financier. For example an aircraft operated by an airline or AOC may have a 0% VAT treatment only whilst it is operated by them; if it is repossessed or becomes ‘off lease’ the applicable VAT rate may rise to around 20% which could be imposed (for example) when the aircraft moves into the UK/EU.

If you are in any doubt as to your position or would like to discuss please feel free to call us as there are several ways in which an aircraft could enter the UK/EU without incurring a VAT liability for the financier such as:

  • Inwards Processing Relief if the aircraft is going to a maintenance facility;
  • Customs Warehousing if the aircraft is being parked or awaiting further work; or
  • Temporary Admission if the facts of the case are appropriate.


Please let us know if we can be assistance.


The information included in this article is considered true and correct at the date of publication; changes to rules and regulation made after the time of publication may impact on the accuracy of the information referenced or inferred to in this article. The information in the article may change without notice and Martyn Fiddler Aviation is in no way liable for the accuracy of any information printed or stored or in any way interpreted and used by the user. This article or the information contained in it is not provided or intended to be used as advice of any form.
If you have any doubts or would like to discuss any aspect of this article, please do not hesitate to contact one of our experts who will be happy to discuss your individual circumstance.
About the author

Martin Kennaugh is Aviation Director at Martyn Fiddler Aviation and is based in the Isle of Man. Martin joined the ICM Group in 2007 and quickly developed ...

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