Airline uses Irish limited companies to employ some UK-based pilots, thus curbing its obligations for benefits such as sick pay

This article is more than 2 years old

This article is more than 2 years old

Ryanair pilots are being investigated by HM Revenue & Customs over complex employment structures imposed on them by the no-frills airline.

Several experienced pilots told the Guardian that they have faced tax investigations relating to the way in which they are employed by Ryanair. Europe’s busiest airline is already grappling with a PR disaster caused by errors in how pilots are rostered for work – leading to the cancellation of tens of thousands of flights through to March next year, which has disrupted the travel plans of 700,000 passengers.

Ryanair has also clashed with its pilots over their working conditions, with many complaining about the same contract arrangements that have piqued HMRC’s interest.

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The tax authority’s focus on individual pilots emerged two years after it launched an investigation into Ryanair’s use of agencies such as Brookfield Aviation to provide about half of its 4,200 pilots.



Those who apply to join Ryanair are told to set up an Irish limited company and are made directors of it, under the guidance of accountants recommended by the airline. That company then supplies pilots to one of several agencies, including Brookfield Aviation and McGinley Aviation, who in turn supply them to Ryanair.



The system limits Ryanair’s obligations to the pilots, such as sick pay – among the factors that allows the Dublin-based carrier to keep its costs low. But the use of Irish limited companies to employ pilots based in the UK has led to pilots with limited experience of the tax obligations of a limited company falling foul of its fraud investigators.

One UK-based pilot said he has been under investigation since February 2015, and is being questioned by HMRC about an employment structure he had no choice but to use.

“When I started employment, I had to set up a limited company in Ireland with two other pilots who I knew from training and were employed by Ryanair at the same time. We had to go to Ireland, meet their accountant and set up a company.”

He said his lack of experience of acting as a company director meant he left tax affairs to the accountant recommended by Ryanair, but has still been hit with a two-year investigation.

“You’re sitting there waiting for the brown envelope to hit the doormat,” he said.

“I’m no tax expert and I thought I was doing everything correctly. Now I’ve had to send my logbook off, which is priceless to me.”

A former colleague, who used to train pilots for Ryanair, said: “The public should be aware that some of the pilots flying the planes are stressed because of the way they operate.

“You have HMRC hounding people who have been pulled into this system that is run by Ryanair.”

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A third pilot, who is under investigation for non-payment of taxes over five years, said HMRC told him tax on his earnings should have been paid in the UK, even though he was employed by an Irish limited company.

He said he had been given “no control over the governance of the way [tax] was being paid”.

According to one letter sent to him by HMRC and seen by the Guardian, the tax authority conceded that he had not “engineered” the complex structure and was simply trying to gain employment.

“You speak to some of the people affected by this and they’re broken men,” he added.

Another pilot showed the Guardian a document in which the agency he worked for told him sign a disclaimer to say he was not an employee of the company but of his own Irish limited company.

He said this structure ultimately led HMRC to look into his tax affairs, causing him undue anxiety.

“It was one of my main reasons for leaving. I was sick of always being worried if I was paying tax correctly,” he said.

And he warned that pilots from other countries are also facing investigations by their domestic authorities.

“I flew with one guy who had to sell his house and car because he’d been landed with a tax bill of €40,000,” he said. “He hadn’t been fiddling it on purpose but he’d just got it wrong.”

A fifth pilot said British pilots were now worried about their homes being raided, pointing to action taken by Germany tax authorities last year over pilots employed by Brookfield Aviation.

“Imagine doing this job when you are constantly worrying about whether what you are doing tax-wise is legal, simply because you are not given any other option by your own employer,” he said.

All of the pilots interviewed also warned that the use of self-employed contracts, which do not entitle them to sick pay, meant some were turning up to work even if they were ill.

HMRC said: “We don’t comment on identifiable individuals or organisations.”

Ryanair said: “We do not comment on rumour or speculation.”