Buy a yacht via my company?

W

woody001

Well-Known Member
Joined
12 Aug 2004
Messages
1,207
Visit site
Hi,

Iam in a postion where I may buy a new yacht (2nd hand, but new to me), Iam thinking of doing this via my company.
The work I do will mean I will be able to offer team building courses on board. (I will hire a professional skipper of course) whilst I conduct the training.

This maybe once or twice a year.

The question is, what are the advantages and disadvantages of doing this? Vat, Tax, mooring fee's, setting of profits etc.
I know of a few people who do this with racing yachts, but I can't get hold of the them untill next week to discuss.

Si.
 
sorry not much help on the purchase via your company. but i guess the boat must be coded every few years. which would mean you have to buy extra stuff for it than you may, if the boat was yours.

what make of boat are you interested in.
 
Hi,

So how do these guys I know have there racing yachts via a company? What about if i forgot the training courses?

Make of boat - It's a BIG surprise!! ...but may not happen yet!
 
At the end of the day whatever you do must be justified to HM Revenue and Customs as a business with allowable business expenditure. Whatever use you get from the boat will be regarded as a benefit in kind. The longer it takes for them to find you out, the more it will cost you.

Remember they can just issue the demands, it will then be up to you to justify your case.

They will also go into every aspect of your business and private life, it will then cost you £1000's to sort it all out
 
Woody - be carefull - the Inland Rev will try to eat you alive - they watch all expendature like hawks, you wll end up being taxed on a benifit in kind..

cheers

Ian
 
Agree with Ian, also you will attract a lot of attention from the VATman if you repeatedly submit returns showing very little or zero revenue and reclaiming tax on a lot of costs. If this is the case, I wouldn't even bother being registered which partly defeats the purpose.
 
I *assume* that if the company owns the boat, then in principle, it can claim the VAT back on the purchase (if you're buying new), and on the expenses of running the boat. Clearly this could save you a lot of money.

But... As others have pointed out, the revenue could conceivably take an interest, and it they decided it was a perk, I guess they could make you pay income tax on the benefit.

Get good advice!
 
I'm not an accountant, but my recollection of setting up my own limited company 7 years ago, the VAT man will not consider you registered until you have made your first taxable supply. ie you have sold something, either goods or a service, on which VAT is chargeable and hence submitted with a return.

If you just set up the company, register for VAT, then reclaim the VAT on any purchase whether its pencils or a boat, without having taken any revenue they will think you are taking the p!ss, unsurprisingly.
 
Inland Revenue will look very closely at this.

Also my undersatanding is - and I could be well be wrong -is that if you are chrtering a yacht solely for racing use then you are exempt from MCA coding. You will of course be required to comply with the relevant ISAF Offshore Safety Regulations.
 
I was told recently, by a self employed guy, that in order for him to stay VAT registered, he had to have a turnover of >£37k per year or he would lose it.... so its not just one taxable sale, but rather a lot.
 
Simple answer to this - don't!

I have done some research into this for an article for a banking magazine and the universal advice was that the IR will clobber you unless... The company is wholely involved in a marine trade such as charter or a sea school or needs the boat to carry out its work (eg a workboat or a RIB for transfering staff to offshore installations) or, if the company is not involved in the marine trade, the boat is operated as a separate entity not by an individual - a company yacht club, for example with fee paying crew - and the use is mainly commercial. This could be interpreted as 'team building' or 'corporate hospitality'. But the IR has wised up to this and almost always refuses to buy it. If it does it will sting you for benefit in kind payments which make the whole deal a no-no.
The boats which have been mentioned as company boats are almost certainly ones which are operated as full time charter boats by a charter company and branded by the chartering company or they are simply sponsored.

There is another tax avoidance ploy and that it cross-border leasing. This is complex and can only be made to work for very large boats. Again the IR is wise to it and doesn't like it. I think regulations are being introduced to ban it anyway.
 
You could get away with it if you chartered the boat (at a reasonable rate) when you used it - therefore you are already paying for your use and it ceases to become a taxable benefit.

I know of owner/charter boats that are set up through an owning company and VAT paid/reclaimed (you have to charge VAT on your sales and pay this over) - this is fine, but if your use is high and chartered use is light then they will look upon this poorly.
 
[ QUOTE ]

So how do these guys I know have there racing yachts via a company? What about if i forgot the training courses?

[/ QUOTE ]
These guys you know may be about to be shafted by the IR, or be fibbing major-time to you, or to the IR.

Don't step into the lion's den dressed as a lump of meat. /forums/images/graemlins/wink.gif
 
Sorry to be a smart arse but if you are running a company you should be au fait with the rules and regs. Any business man knows that the biggest advantage of using a company to buy anything is that you get the VAT back, prob is that on second hand boats you dont pay VAT so what is the point?
 
[ QUOTE ]
If your company folds the receivers could also take the boat as an asset, I think?

[/ QUOTE ]
Would make sense to me....

I might have got the wrong end of the stick, but after reading woody001's other recent post, I am thinking that buying it through the company would mean the company could fund for the running of the boat etc aswell as the purchase, whilst he sells his existing boat. Anywhere near the money?
 
Erm - 2nd hand boats can incur VAT exactly the same as new ones ... depends if they are being sold by a VAT registered company. Also - running costs/repairs/renewals/upgrades all have VAT - so these could be claimed back too.

There is not a problem with a company owning a boat for a private individual to use - but the individual has to declare it in their tax returns as a benefit which is then taxed.
 
So if that's the case and the ILR take their cut he is paying the tax at a different part of the procedure.
The difference is that, as Dogwatch says, he stills pays tax, but the boat is a company assett, not his. He may even pay more tax depending on his personal tax position vis-à-vis the company.
 
You must log in or register to reply here.

Share this page

Top