An Inland Revenue enquiry

[ransell]

My company owns a motor yacht which is moored in the Balearic Islands. The yacht was purchased in the UK in 2003 for the purpose of running a legitimate charter business. Prior to delivery to the Med, the vessel was fully coded by the manufacturer for charter. The Inland Revenue, however, are going to great lengths to persuade me that this is not a legitimate business venture. I would be very interested to hear from any owner who is able to recommend a firm of accountants who have the necessary expertise in dealing with this type of inland revenue enquiry.

 

[MedDreamer]

[ QUOTE ]
with the intention of running a legitimate charter business

[/ QUOTE ]

Your wording suggests that you never actually started the business although that was your intention, am I right in my assumption?

 

[rogerthebodger]

Did your company ever receive any income from motor yacht and did you use it personally.

If you did get income show bills to IR and try to reduce personal use time.

If income smaller than expense and personal usage is more than 10 - 15 % dont even try. Bit the bullet and pay up.

I tried it and gave up.

 

[Steve Clayton]

If it is UK flagged then you will have gone through the MCA processes for charter and the Spanish processes making it legal for it to be chartered in Spanish waters.

Steve
www.seraph-sailing.com

 

[ransell]

Not at all. The vessel was purchased new in the UK and fully coded prior to delivery to the balearics where it has been run as a charter vessel for the last four years.

 

[ransell]

This has been run as a legitimate charter business from day 1 but unfortunately the Revenue are really digging their heels in. If you are going to run a motor yacht within a company, you must be able to show you have made the effort to run it as a proper business. Providing a few receipts of income is just not enough.

 

[MedDreamer]

Do you use the boat privately?

 

[Steve Clayton]

Assuming you are chartering through an agent on the Islands , and so you take your cut, then that agent must be issuing bonefide invoices/receipts that include identity references such as passport or NIE references. Get copies of these as proof of activity and/or income.

Can also depend on who is maintaining and paying the running costs.

 

[Steve Clayton]

[ QUOTE ]
Do you use the boat privately?

[/ QUOTE ]
If he does then he should be paying the company as a "benefit". Of course we never benefit in this way - we are ensuring the safety of the vessel, testing the coldness of the fridge for the beers for the guests, the instruments are all functioning correctly, checking out the quality of the anchorages and the windless.

 

[powerboats]

[ QUOTE ]
This has been run as a legitimate charter business from day 1 but unfortunately the Revenue are really digging their heels in. If you are going to run a motor yacht within a company, you must be able to show you have made the effort to run it as a proper business. Providing a few receipts of income is just not enough.

[/ QUOTE ]

I would say it is fair to assume that a 4 year old legitimate charter business should be able to provide more than "a few receipts of income".

 

[rogerthebodger]

Is the problem that the IR will not allow the expensis claim against tax ?

If the proof of income is not accepted then how can he tax you on it and if he will not allow the expensis tell him you will not declair the income and he is to take legal action against you.

It sounds like he wants his cake and to eat it

Stand you for your rights we give way to easly.

Even through I gave up on my boat tax I won on some other issues when I could prove without a doubt I complied with the rules and laws

 

[Howardnp]

The day job is bean counting and handling HMRC enquiries (thankfully not loads of them) and no not looking for business!!

There is scant information given to be able to give any sort of reasoned response but consider the following:

You mention that the boat is owned by your company, if the charter element is tiny compared to the rest of the company activity and some of the "expenses" include your journeys out to maintain and inspect it etc then it is hardly surprising that you have an enquiry.

If it is an "aspect" enquiry, i.e. restricted to the boat, take a commercial view on it as the last thing you want is the Revenue developing it into a full enquiry and the whole company and possibly your personal stuff is looked at.

If you have solid arguments then defend the position but go for settlement to wind it up, don't be obstructive as that increases the penalties (which can equal the tax they levy) and co operate.

 

[MaltaBob]

We thought of doing just what you have, our accountants 'strongly' advised not even to think of it! From memory they would only support the idea as ' a stand alone' company with everything as a seperate entity.
Its one of HM Revenues favourite pursuits, and if you put yourself up for it, the only way will be to pay up! /forums/images/graemlins/mad.gif

 

[Steve Clayton]

The other option is to trade in Spain with associated tax liability.(If you are chartering in Spain then you have to be Spanish legal!!!!) If your yearly profit is declared to be under €6000 then your venture can be declared as a "hobby" activity with no taxes due. On the UK side our accountant makes the appropriate yearly tax returns where I claim the UK element costs such as insurance, YDSA costs, items purchased in UK for maintenance etc in the usual way.

If for whatever reason you do not have the Spanish paperwork then settle with IR as soon as possible - you don't want them discussing this sort of thing with their Spanish counterparts!!!

www.seraph-sailing.com

 

[rickp]

[ QUOTE ]
If for whatever reason you do not have the Spanish paperwork then settle with IR as soon as possible - you don't want them discussing this sort of thing with their Spanish counterparts!!!

[/ QUOTE ]

Any evidence that this actually happens? Sounds far to organised for the muppets that I've had to deal with at HMRC in hte past....

Rick

 

[Deleted User YDKXO]

Have you been paying benefit in kind for your private use and is your boat owned by your main company or a separate company solely set up for charter use?

 

[Cymraeg]

I have just completed dealings with HMRC that stretched out over two years and cost several thousand pounds only to be told that I was right all along. If you are not able to wind up proceedings rapidly to your mutual satisfactions, then may I suggest you approach a specialist tax consultancy rather than a more general purpose accountant? These people are aware not only of the rules and regulations, but also the manner in which the Revenue work and how to best counter their approaches. In my field this is companies such as QDOS and Accountax (Google them to find contact details). It can't do any harm to get in touch with them, and if your situation falls within their remit then perhaps they will advise you on how best to proceed.

 

[Neddie_Seagoon]

These people can help Shaw's . Our company used to operate a 130' Motor Yacht which we chartered out at a loss to offset costs. Andrew Shaw knows his way around such matters, if the revenue are after you he will be able to advise you how to mitigate the problem.

Not cheap tho'

 

[marksaab]

If you are a member of your local Federation of Small Business (FSB) they can usually provide assistance and its free! So far my dealings with HMRC have been ok, in fact they can be helpful at times but as everyone else has said be straight with them, if they think you are evading and they are onto something they will not let it go!

 

[savageseadog]

This is more of a legal situation than an accounting one. If you want to spend the money get a solicitor that specialises in taxation, not a high street solicitor, it might be worth finding other charter companies and find out what legal help they've had. You need to find a legal precedent for the HMRC accepting what you are doing.
There is nothing to stop you from doing it yourself if you are reasonably intelligent. Most important point is to show that you and your family have not used the boat or if you have you have charged back an amount equivalent to the cost of that use.