Buying a Company Boat

[Simon391088]

Hi,

I am self employed and would like my company to buy a boat for me to use!

Has anyone done this? Is it possible? Any idea what the tax implications are?
Obviously it would be beneficial rather than me having to pay the money to myself minus tax and Ni, then have to effectively pay twice as much.

Any comments welcome!

Many Thanks

Simon

 

[aidancoughlan]

In Ireland I reckon it would it be a similar arrangement to a company car.... If you use the boat for business reasons (eg demo boat for a broker) you would probably get away with it, if you partially or wholly use the boat for personal use your personal tax liability would include a liability on the 'benefit' that you get from the boat (ie. the money you save by not having to have bought it yourself, minus the portion which is attributed to business use).

The Irish Revenue guys have got us screwed every way, but it seems logical that something similar would exist in the UK?

 

[Swagman]

In the UK it is called a 'Lennarts Scheme' by the IR and I was advised there are no issues with a company buying a boat - provided when you personally use it (as opposed to when you work on maintaining and testing it) you pay the company for your private use.

I am told it is not just the NI and tax on salary you may have forsaken to allow the company to invest in the boat - but if the company is VAT registered then you also can reclaim the VAT component on any new yacht purchase plus all gear, mooring costs etc.

 

[halcyon]

Something I keep looking at, thinking about. As we design and market marine equipment, I wander how we / they can differenciate between testing new desings, or me going sailing for a day. Equally if we arrange a few meeting up the coast, is my cruise to Dartmouth a sales demo trip, or my summer holiday? .
I was thinking would I be better off owning the boat, and charging the company expenses for the use of the boat for testing and marketing, as per use of private car.

Brian

 

[jfm]

1. You will have a benefit in kind when you use the boat privately. 20% x cost of boat x D/365, per day, minus any rental you pay to company. Then 40% tax on that number via P11D. NB, D= days boat is avaialbe for use, not days actually used. Therefore best to have board minute saying it is available to you on the specific days you plan to use it, and only those days. Not have it generally available whenever you want

2. Company ought to get VAT recovery, capital allowances, and deduction for running costs. BUT you run a significant risk that the comapny's tax inspector could argue it's not an expense for the company's business, and so try to disallow deduction for these items. So is a good idea if there is business use, eg company promotion (but not customer entertianing) etc. also you paying charter fees to company is a business reason so far as the company is concerned. Best to document the intended business use in the board minute that decides the purchase of the boat. Unfortunately, any rental you pay the company will be subject to tax in the company and VAT

3. Likewise the VATman could try to deny VAT recovery on grounds of non business use. Ditto above to improve your position here.

4. If you charter it off the company, you will not need MCA code

 

[jonjo]

Putting your company's new yacht into a flexible charter management scheme such as Fairview's (Hamble & the Med somewhere) would help prove the business case with the authorities I suspect.

 

[cliffb]

For what is worth... I looked at doing this. After discussions with the accountant and much brow beating I decided that the potential hassle and possible limitations on use didn't make it worth it. What clinched it for me was the almost certain prospect of Inland Revenue and VAT poking about in my books, trying to find a way of getting at me. And then, in the process finding something else, non-boat related, that I was doing wrong... particularly in the VAT area.
I don't know about you, but I live in fear of the IR or VAT guys decending on me for an inspection. Not that I'm knowingly doing anything wrong...but they sure as hell will find something if they dig long enough...it's thier job after all!
IMO keep it simple. Bite the bullet, buy the boat from your own funds and sail it whenever you like, without having to look over your shoulder to see if a tax man is watching. Remortgage your house or pay yourself a sodding great dividend...or both. But mainly...get sailing.....

 

[cardinal_mark]

I too had my accountant look at this and decided to play it straight. Once all the benefit in kind tax is dealt with plus the cost of MCA coding and the possibility that I might attract more than a passing interest from the IR and VAT, I couldnt see the point.

I'd agree with the post above - big dividend / equity release or a combo of the two and enjoy sailing whenever you like without feart of the IR & VAT men waiting on the pontoon when you return!

Mark

 

[Simon391088]

Thanks for all the feedback on this.

I agree that attracting VAT/IR inspections is not a great idea and that it is probably best to extract the money first via dividend etc.

However I would actually like to have sails printed and the boat plastered in company decals, as I think it might be a good advertising method. The company has wasted money on plenty of other forms of advertising so surely this would have a case with the taxman? /forums/images/graemlins/smile.gif

Thanks
Simon

 

[fireball]

It depends on how much you want to spend on the advertising ....

If you spend 000's on new sails (with decals) then IR might reasonably expect you to show the marketing potential for the company.... very difficult to quantify but very feasible...

being nosey - what does your company do?

 

[fireball]

It depends on how much you want to spend on the advertising ....

If you spend 000's on new sails (with decals) then IR might reasonably expect you to show the marketing potential for the company.... very difficult to quantify but very feasible...

being nosey - what does your company do?

 

[Simon391088]

Hi,

My company provides Internet Ecommerce services.
Sadly nothing to do with boats!

Simon